# Corn hits $6.00



## g/o (Jul 13, 2004)

Corn prices jumped to a record $6 a bushel Thursday, driven up by an expected supply shortfall that will only add to Americans' growing grocery bill and further squeeze struggling ethanol producers.

Corn prices have shot up nearly 30 percent this year amid dwindling stockpiles and surging demand for the grain used to feed livestock and make alternative fuels including ethanol. Prices are poised to go even higher after the U.S. government this week predicted that American farmers - the world's biggest corn producers - will plant sharply less of the crop in 2008 compared to last year.

"It's a demand-driven market and we may not be planting enough acres to supply demand, so that adds to the bullishness of corn," said Elaine Kub, a grains analyst with DTN in Omaha, Neb.

Corn for the most actively traded May contract rose 4.25 cents to settle at $6 a bushel on the Chicago Board of Trade, after earlier rising to $6.025 a bushel - a new all-time high.

Worldwide demand for corn to feed livestock and to make biofuel is putting enormous pressure on global supply. And with the U.S. expected to plant less corn, the supply shortage will only worsen. The U.S. Department of Agriculture projected that farmers will plant 86 million acres of corn in 2008, an 8 percent drop from last year.

Moreover, cold, wet weather in parts of the U.S. corn belt may force farmers to delay spring planting, potentially sending prices even higher.

While corn growers are reaping record profits, U.S. consumers can expect even higher grocery bills - especially for meat and pork - as livestock producers are forced to pass on higher animal feed costs and thin their herd size.

"Higher corn prices is going to affect meat prices. If you're feeding with $6 corn, you'll definitely have some (cost) pressure," Kub said.

In addition, corn and corn syrup are used in an array of products, meaning the price of everything from candy to soft drinks will eventually go up, analysts say. It's the latest dose of bad news for U.S. consumers, who are already struggling with higher food costs from record increases in the price of wheat, soybeans and other agriculture products.

Another loser in higher corn costs is ethanol producers, who are struggling to squeeze out gains as corn's record-setting run outpaces the price of ethanol, currently at around $2.50 a gallon.

"For years, corn was cheap and fermentation processes for ethanol production came to completely dominate the biofuel industry in North America," Michael Jackson, president and chairman of Vancouver-based ethanol maker Syntec Biofuel, said this week. "Now, with corn prices well over $5 a bushel, corn ethanol economics have gone out the window."

The nation's 147 ethanol plants now have the capacity to produce 8.5 billion gallons of fuel a year, according to the Renewable Fuels Association. Corn is the basic feedstock for most of the plants and about 20 percent of last year's 13 billion bushel corn crop was consumed by ethanol production. That percentage is expected to increase to 30 percent for the next crop year, which ends Aug. 31, 2009, according to Terry Francl, a senior economist for the American Farm Bureau Federation.

There are still plans to build or expand another 61 plants, which will add about 5.1 billion gallons of capacity. However, as corn prices have climbed over the past year or so, construction of several plants has been halted or delayed, shaving about 500 million gallons worth of capacity off the original figure, according to Broadpoint Capital analyst Ron Oster.

At least one facility, the Alchem plant in Grafton, N.D., shut down late last year because of high prices.

A new plant hasn't broken ground over the past couple of quarters, Oster said, and while producers can have positive gross margins with ethanol at $2.50 a gallon and corn at $6 a bushel, that doesn't mean companies are profitable.

"Bottom line earnings are near break-even or modestly below break-even," he said.

Looking ahead, only the strongest ethanol producers will survive in an era of ever-rising corn prices, said Soleil Securities analyst Ian Horowitz.

"There are going to be some particular companies that definitely have the balance sheet and efficiencies that will be able to eke out a positive return in this kind of environment," Horowitz said. "And then there will be others that will suffer at the hands of $6 corn."


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## g/o (Jul 13, 2004)

If we have any weather scares this summer, Katie bar the door. We aint seen nothing yet. CRP will be a thing of the past after the election, it would be a bad move to get rid of it before the election.


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## HUNTNFISHND (Mar 16, 2004)

Producers better enjoy it while they can!


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## drjongy (Oct 13, 2003)

Corn is made to be eaten, not burned or turned into ethanol.

America at its finest screwing itself over again by only looking at the short term gains. Ethanol from corn is NOT the answer to our problems...it's actually just going to create more.

Now not only will gas still be expensive, but our grocery bills are going to keep skyrocketing!!


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## USSapper (Sep 26, 2005)

drjongy said:


> Corn is made to be eaten, not burned or turned into ethanol.
> 
> America at its finest screwing itself over again by only looking at the short term gains. Ethanol from corn is NOT the answer to our problems...it's actually just going to create more.
> 
> Now not only will gas still be expensive, but our grocery bills are going to keep skyrocketing!!


Spot on, CORN based ethanol is a joke and I dont see how our political leaders dont see that it just makes us more dependent on foreign oil.

Grass is the way to go :wink: Switchgrasses that is


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## bjertness07 (Jan 4, 2005)

Perhaps we should review our corn EXPORTS. According to www.farmdoc.uiuc.edu, the 2007 US corn exports were approximately 2.25 billion bushels. Let's take care of our own livestock and food producers first, then the rest of the world. And in my opinion, corn based ethanol has been the most viable way, so far, to try and break our ties with foreign oil. It is, however, becoming obsolete. We need to start putting more emphasize on biomass ethanol production. A new switchgrass variety slated to be released is supposed to yield up to 5 times the amount of ethanol compared to corn per acre. I know that too will face opposition, but what else do we have?


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## Traxion (Apr 16, 2004)

I'm afraid the hunting end of things is going to get tough with the CRP going out. I'll still be out there hunting, no matter if the limit is one duck or goose, but it sure will be sad to see the end of the good old days. Might have to get serious about fishing!


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## headshot (Oct 26, 2006)

> Might have to get serious about fishing!


LOL, don't you think your water resources are being sold out from under you too? Gonna need lots of water to grow corn in the desert.


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## USSapper (Sep 26, 2005)

bjertness07 said:


> And in my opinion, corn based ethanol has been the most viable way, so far, to try and break our ties with foreign oil.


How so?? It takes 1.25 gallons of crude to make 1 gallon of ethanol, thus only making us MORE dependent on foreign nations. Until ethanol efficiency improves, I cant see corn based ethanol going anywhere


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## Bobm (Aug 26, 2003)

G/O I have a couple questions

why if corn is rising in price are farmers cutting production back?

why does the election have anything to do with the timing of getting rid of CRP

Thanks


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## blhunter3 (May 5, 2007)

Since the corn has been cutting back, soybeans are what is being planted.


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## g/o (Jul 13, 2004)

Bobm, Cost of production, Corn takes a lot of inputs mainly fertilizer, and seed cost. You can plant and harvest beans much cheaper.

Come on Bobm did you just fall off the turnip truck? Congress or the president try to do nothing to upset voters before a election. Afterwards who gives a damn. If Busch announced today they were going to allow anyone who wanted to take their land out of CRP without penalties, we would have a mass exodus. We would have very few acres left, it would help get the grain prices down and make housewives in Atlanta happy. The DU, PF and all the rest would have a fit.


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## cbas (Apr 3, 2007)

Algae into biodesiel IMO.

Collocate the plants with, grow tanks at sewage treatment stations and we got a win win.


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## USSapper (Sep 26, 2005)

cbas said:


> Algae into biodesiel IMO.
> 
> Collocate the plants with, grow tanks at sewage treatment stations and we got a win win.


You have a link to this?


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## Bobm (Aug 26, 2003)

g/o said:


> Bobm, Cost of production, Corn takes a lot of inputs mainly fertilizer, and seed cost. You can plant and harvest beans much cheaper.
> 
> Come on Bobm did you just fall off the turnip truck? Congress or the president try to do nothing to upset voters before a election. Afterwards who gives a damn. If Busch announced today they were going to allow anyone who wanted to take their land out of CRP without penalties, we would have a mass exodus. We would have very few acres left, it would help get the grain prices down and make housewives in Atlanta happy. The DU, PF and all the rest would have a fit.


Jim be nice I'm just asking because I respect your knowledge in this area, cut me a little slack I'm pretty far removed from farm life and the politics associated with it 

so obviously the cost of corn fertilizer must be driven up by other factors along with increased corn production, the demand for phosphorus ect must have risen in other parts of the world and/or the supply has dropped. I was discussing fertilizer costs last night and was told that all but four or five major players in that industry are gone and there is suspicion of unofficial price fixing combined with much increased demand overseas. ANd then of course the price of fuel must be a factor.

The second part of you comment is the part I still am unclear about, are you saying that farmers are cutting back corn production but would increase corn production is more (now CRP) land was available. I mean thats what your original post was about ,corn . Or would they be planting more beans.

One more questions does it take anymore fuel to plant and harvest corn than beans??

These are all honest questions no sarcasm intended.
thanks
Bob on the turnip truck :beer:


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## Bobm (Aug 26, 2003)

One more question which party do you think more likely to allow CRP to come out Dems or Reps and why.

And anyone that replys please dont let this turn into a political rant just answer my question with facts or polite opinion and tell me the why of your opinion.

If it turns into a political bashing as a moderator I will have to remove it.

I am just curious about the reasoning and dont care to start a political discussion on this forum. I just dont understand the issue very well, and want to.

thanks all


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## g/o (Jul 13, 2004)

Bobm, I was just having a little fun with the turnip truck joke, sorry if I offended you. Fertilizer is a big factor with corn, beans you can go without any they produce nitrogen. You will use way more fuel come harvest with corn, trucking etc. 40 bu per acre beans, 120 bu + for corn.

Bobm, I don't think either party will matter, both will give in after the election. We have a huge world market now and with ethanol we have a shortage of all grains. By putting CRP land back in production we will produce way more grain which will help curtail the prices. As long as our dollar is cheap our grain is a bargain. They have been kicking the idea of early outs for CRP for a year now. Soon as the election is over they will give the producers the option. The house wives are starting to holler, after this summer they will be screaming.


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## Bobm (Aug 26, 2003)

Jim, does the early out come at any cost or penalty to the farmer?

My brother is in the grass seed and landscape equipment business and between our drought and the costs of fertilizer, combined with the building turndown that business is really hurting down here.

My feeling is this will just be a cycle and once some good alternative like 
hydrogen gets established it will settle back down.

Sadly I guess this will really screw up phez hunting for the next 10 years probably.

I guess its huns and chukars in Idaho for the next ten years, I better get in shape :lol:


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## cwoparson (Aug 23, 2007)

> How so?? It takes 1.25 gallons of crude to make 1 gallon of ethanol, thus only making us MORE dependent on foreign nations.


I believe there is more myth than fact to that statement. It is true that it takes more BTU's to convert corn to ethanol than BTU's gained from ethanol. So it would be a correct statement if it was crude oil or gasoline used for the conversion, but if you check it out you will discover that plants that do the conversion are using natural gas or coal which there is no shortage, not gasoline. So the only gasoline involved is that which the farmers use and transportation. According to the Energy Future Coalition it requires one gallon of oil to produce 12-20 gallons of ethanol whether it is made from corn, sugar cane, or cellulose.

The stories about it takes more oil than what is produced in ethanol was put out by those only looking at using oil as means to run the plants that make ethanol. It would only be true if those plants were using oil to run their plants but that is not the case.

What will and has changed is the cost. With the rise in cost of corn and fertilizer the amount of oil required will remain the same but the cost is up with a bottom line that ethanol will not be cheaper than gasoline as some hoped. Still, the reduction in dependency will be there, especially when and if technology catches up with the use of cellulose.


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## Plainsman (Jul 30, 2003)

Cwoparson, the people that think ethanol makes us energy independent are leaving many things out of their estimations. I have seen a half dozen studies with conclusions that make ethanol viable, and those that do not. In every case those that see ethanol as viable are poorly constructed investigations.
A bushel of corn takes the same amount of energy no matter what it is grown for. Many investigations into ethanol look mostly at the conversion and pay less attention to the corn production itself. Making ethanol plants more efficient solves only a very small part of the efficiency problem. For a realistic comparison you must count the energy used in the production and transportation of fertilizers, pesticides, prorated machinery production energy cost, and transportation of equipment, absolutely everything. When you do that ethanol is a great energy loss.


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## Skip OK (Jul 16, 2006)

According to my research, to produce corn based ethanol, and using the "equivalent gallon method" (that is converting the numbers of gallons of E100 to gallons of gasoline or vice versa) you get from 0.97 gallons of fuel to 1.25 gallons of fuel in ethanol for every gallon of fuel it takes to produce.

That means at the lower end of the spectrum making ethanol takes more petroleum than you get back and at the upper end (where it is assumed that every farm and ethanol plant is running at 100% efficiency, and using nothing but state of the art methads and equipment) for evey 1 gallon petroleum input we get back the equivalent of 1.25 gallons.

I think this is one reason you don't hear Big Oil fighting ethanol; they will sell nearly as much product to produce the stuff PLUS when gas price go up they have another "partner" to shove some of the blame on.

As far as I can tell, the ONLY positive to corn based ethanol is the 'underground" subsidy the 20% mandate gives the corn growers. If the "mandate" ever goes both ways (we have to use 20% ethanol BUT the corn growers have to supply enough crop to do so) this whole thing will fall apart like petals from an autumn rose.


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## cwoparson (Aug 23, 2007)

Plainsman it's easy to believe something won't work when you want to believe it won't work and I believe that to be the case here. I haven't run into anyone yet that claims ethanol by itself will make us no longer energy dependent on fossil fuel but many claim it will assist us in getting off fossil fuels controlled by other countries or at the very least reducing it's use.

Poorly constructed investigations? What does that mean other than just a desire to deny there is a possibility. The information I gave you was from as I stated the Energy Future Coalition. Where is your information coming from and how old is that information? Every time I hear someone claim it takes more fuel to produce ethanol that what you made, I discover their information is several years old. The advancement in technology just in the last couple years should have put to rest such claims but somehow they persist.

I've already covered the amount of fuel (crude) used with with production of corn and transportation. The conversion at the plant is a red herring as oil is not the product used as some would have you believe. Now if you want to throw in prorated machinery production energy cost, and transportation of equipment then nothing is viable for future energy including nuclear energy.

It's not just the USA that is heavily investing in ethanol. Countries of all sizes are moving towards ethanol or have been doing so for years. It's not the full answer but it is a start. Unless of course one would rather sit on their butts until the last minute. Here is another way to look at it. Even if corn base ethanol was actually cost prohibitive, which I don't believe it now is, the technology gained which will allow us to move to other base stock is never lost. http://www.distill.com/World-Fuel-Ethanol-A&O-2004.html

http://www.energyfuturecoalition.org/bi ... anol.htm#4


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## Plainsman (Jul 30, 2003)

> The conversion at the plant is a red herring as oil is not the product used as some would have you believe.


There is a perfect example. Energy used is energy used, it doesn't have to be all oil. Use hydroelectric, and that is less electricity for homes or anything else using electricity. So where do these other electricity users get there electricity? From coal generation plants, diesel fired generators like the couple we have here at Jamestown, maybe wind generated electricity. The point is you can't throw that energy use out. For a realistic, comparative assessment all energy used must be counted.

I am not saying ethanol isn't a good idea. I am saying corn ethanol at this time is not a good idea when there are alternatives that give seven to one returns. Why ride a pig when you have a race horse.


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## blhunter3 (May 5, 2007)

Your right, ethanol from corn is a bad idea. SWITCHGRASS or is other parts of the world sugarcane. Since 1988 scientist have improve the efficeincy of corn ethanol by 50%(sorry I cannot remember what book had that, but I was able to use it for a college paper). If they can continue to improve like that, that will work, but until then, we consumers have to sit idle.


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## cwoparson (Aug 23, 2007)

> There is a perfect example. Energy used is energy used, it doesn't have to be all oil.


Thats being simply short sighted about it. True, energy is energy used but one thing there is no shortage of in this country is coal and natural gas. Especially coal and with new plants that have built in scrubbers pollution is not a problem. These coal fired plants are running steam driven generators that supply their own electricity. Nobody is being short changed electricity. Taking one source of energy that we have a abundance of to replace a source of energy that we have less of just make sense for the short term. Other viable options are long term, very very long term.

I just recently read where a farmer down in Georgia is has come up with a genetically altered form of switch grass that is producing over three fold per acre than normal. These are the things that moving forward has produced. The nay sayers said the Wright brothers would never get off the ground or that man would never walk on the moon. Sure glad we didn't listen to them.


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## bjertness07 (Jan 4, 2005)

Thank you cwoparson. I believe you and I are thinking on the exact same lines. And I also heard of a switchgrass variety slated to be released that produces 5 fold the yield.


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## djleye (Nov 14, 2002)

> I just recently read where a farmer down in Georgia is has come up with a genetically altered form of switch grass that is producing over three fold per acre than normal.


Now I will be the first to admit that I am not well versed in this area of energy, but do they not need a whole different type set up for conversion of switchgrass than they do for conversion of corn?? That to me is the rub, if we feel we will eventually be off corn ethanol, why all the infrastructure that will be unusable??? Maybe I am wrong?? :huh:


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## cwoparson (Aug 23, 2007)

My understanding is the ethanol plants today are using the corn kernel only as a product to be converted into ethanol. The development of new methods which allow the use of the entire plant, stalk, cob, kernel, and all will use enzymes and yeast or a process called pyrolysis. As this takes place the older plants will have to convert over. Like you my knowledge in this area is limited but I wouldn't think this would be hard to change. I think one of the biggest challenges some of these plants might face is a method and land required to stow all the mass for conversion. Can you imagine two or three million bales of hay stacked up out back. We may very well see in the future not the giant refineries of today but thousands of small ethanol plants dotted all over the country side.


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## g/o (Jul 13, 2004)

> Can you imagine two or three million bales of hay stacked up out back.


Rat City!!!!


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## djleye (Nov 14, 2002)

g/o said:


> > Can you imagine two or three million bales of hay stacked up out back.
> 
> 
> Rat City!!!!


Is it legal to shoot them over bait!!!!!! :wink:


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## Plainsman (Jul 30, 2003)

> Especially coal and with new plants that have built in scrubbers pollution is not a problem.


They only take care of 75% and currently research is looking at ways to mitigate for that other 25%. They need mitigation because the technology for that last 25% is super expensive. That is why research is being done to look at carbon sequestration of prairie, CRP, wetlands etc.

Look back at my posts two years ago and you will see that I pushed switch grass (_Panicum virgatum_). I have known about these things a year or two before the public hears about it.


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## blhunter3 (May 5, 2007)

People know about the switchgrass, but for some reason the researchers don't. Another thing about switch grass, is that many farmers have raised corn for their whole life and they won't try something new like switchgrass.


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## dakotashooter2 (Oct 31, 2003)

I'm somewhat hesitant about development of a crop based fuel as more than a small suppliment to existing or more consistent fuel source. Having too many eggs in one basket (fuel and food) could be looking for trouble when hard times hit our croplands. I would be reluctant to look at ethanol as anything more than a short term solution. Adding the burden of fuel production to our croplands would likely stess them more than they already are. Right now farmers are pushing the land as hard as they can and we really don't know what the long term effects of that will be.


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## Chuck Smith (Feb 22, 2005)

The $6 corn or any other high grain prices should scare many. I am not talking about ethanol like everyone else. I am talking food costs.

I am talking about the loaf of bread that will cost $5, the gallon of milk that will cost $10, the steak that will cost $10 a pound, etc. Think about all the grains it takes to feed livestock which in turn effects food prices. The this will also effect the cost of a hamburger at the local Cafe. Then when they raise the prices people will stop going out to eat. Then the Cafe may have to make cuts on staff, etc.

You see it is a snow ball effect.

Look at the current scare/recession... It is only going to keep going south. People will pay for food before mortgages, insurance, taxes, luxuries, clothes, retail of any sort, city utilities, etc. Now how many of you will be effected if people stop paying certain bills and focus on food. Then what will the goverment do? Start to bail people out....more tax dollars spent that might not be coming in.

I am not bashing the goverment for bailing people out. That is what they are there to do is help people in some ways. But with they way the current economy is going and then the grain prices.....is could get very scary.

But like G/O stated. To help drive down grain prices more will need to be produced. So goverment programs that took acres out of production will now be asked to go back into production. BYE, BYE CRP and other conservation programs.


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## Plainsman (Jul 30, 2003)

> People know about the switchgrass, but for some reason the researchers don't.


You have that backwards. Researchers just don't say anything until they have years of data to back it up. Someone is always going to say their wrong if they jump the gun. One year data is not sufficient when credability is on the line. What you start to hear is when people retire then work for a private business that gets the ball rolling before federal research is published. Then when it is published, it is published in professional outlets. Mangers who read these publications then bring it to the attention of the people. It's a long process, but essential to maintaining scientific credability.


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## FlashBoomSplash (Aug 26, 2005)

Plainsman

I don't disagree with you but I just wish the researches would have done a little more research on the economic impacts of using corn for ethanol. They really dropped the ball on this one. As some one stated before they are researching ways to use the entire corn plant for ethanol. This would destroy the land even worse. With out organic matter to replace the nutrients being pulled from the soil we will see another dust bowl in the near future. They need to stop ethanol production until they find away to make it out of switch grass or woody species like poplar, cotton woods, and willows.

Most people can afford to pay a little more for gas or a little more for food but not both. Switch grass and woody species will save the economy and wildlife. Plus tax dollars because there will be no need for CRP.


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## Plainsman (Jul 30, 2003)

I agree with you.



> I don't disagree with you but I just wish the researches would have done a little more research on the economic impacts of using corn for ethanol.


They perhaps did ok on the research, but while research was still looking for ways to make alcohol from corn politicians seen a way to make hay out of the whole thing and jumped on the bandwagon before looking.


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## FlashBoomSplash (Aug 26, 2005)

How come everyone in the real world knows this. I said 3 years ago when they started talking about it. And it happened in the 70'S. I feel like screaming what the F$%K right in the face of everyone that started this idea. Talking to people on the coasts and they think this is the fix all for hi fuel prices, when in reality its the doom all for food and fuel prices. The thing that scares me more than fuel is our fresh water supply and ethanol uses a ton of it.


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## Plainsman (Jul 30, 2003)

> How come everyone in the real world knows this.


You see it, and I think many others see it but don't want to see it. They don't want to because somehow they are getting a buck from it. It's a huge ag program, and attractive to agriculture because of the gigantic subsidies. Do you think they care if beef on the hoof hits $3 pound? They will be happy, and vote for anyone who supports ethanol. The people that like ethanol see $5 bread as a good thing, and $10 even better.


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## djleye (Nov 14, 2002)

> fresh water supply


Yep, if the price of food and fuel don't scare the hell out of you this should!! Some say that the next world wars will be fought over H2O!!!!


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## Hamm (Dec 10, 2007)

FPP


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## Chuck Smith (Feb 22, 2005)

Something I read in a local paper the other day (I can't sight the source because the article was not online.)

A bakery's ingredients for its bread mix went up $1000 a month for the amount of bread they sell. Think about it. Now where does that cost get differed too.


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## blhunter3 (May 5, 2007)

Defiantly not the consumer.


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## cbas (Apr 3, 2007)

USSapper said:


> cbas said:
> 
> 
> > Algae into biodesiel IMO.
> ...


Some links on Algae into bio desiel. I read a report from the University of Saskatchewan a few years back. Algae oil is not as good as say Canola but you can produce something like 600 times more an acre than traditional oil crops like Canola, Soy and Palm.

Article on the subject

http://www.popularmechanics.com/science ... 13775.html

Algae production

http://en.wikipedia.org/wiki/Algaculture

PDF report for what I think was the US Gov

http://www1.eere.energy.gov/biomass/pdf ... _algae.pdf

More stuff blogs etc..

http://ergobalance.blogspot.com/2007/12 ... algae.html

Lots of articles

http://www.biofleet.net/index.php?optio ... ing=newest


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## cbas (Apr 3, 2007)

Of course I don't think there is much of a "Algae" lobby out there promoting the use of waste water and CO2 vs. those wishing to protect corn/wheat producers.

Would be pretty cool though


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## FlashBoomSplash (Aug 26, 2005)

This article supports CBAS

http://articles.moneycentral.msn.com/In ... Check.aspx

There is even a video to watch.


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## dakotashooter2 (Oct 31, 2003)

> They perhaps did ok on the research, but while research was still looking for ways to make alcohol from corn politicians seen a way to make hay out of the whole thing and jumped on the bandwagon before looking.


This is a very common reaction in politics. mandate something before it is ready for application which often causes the research to be rushed and flawed. This is what is happening with the "global warming" scare. We are being force fed "solutions" without knowing the long term effects of those solutions. I fear some of the "cures" may turn out to be more detrimental than the "diseases".


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