In the article, Jones provides several good points on ethanol — points that some have forgotten (or ignored) in the orchestrated campaign by the anti-ethanol gang over the last couple of months. An important reminder is highlighted at the bottom and something we need to keep in mind as oil continues to inch upward. Will we see $100 oil in the next couple of months? Where will gas prices be then?
A few paragraphs of Jones' article are below. For the rest, click here.
Separating fact from fiction in the ethanol debate is not easy. "Food versus fuel" is a nice catch phrase, but worldwide, biofuel production accounts for less than 1 percent of total agricultural acreage. Corn ethanol refineries use only cornstarch, preserving the high quality protein for animal feed markets. In short, we can have both food and fuel.
And if you look at the price trends for grains like corn and wheat over time, you will notice that they follow the price of oil. Any Wall Street veteran will tell you why. Higher oil prices increase the costs of producing grain and drive hedge fund speculation into agricultural commodity markets. Oil prices go up, grain prices follow. It's that simple.
The California experience with ethanol is a good one. Ten years ago, California did not have an ethanol industry. Today there are five ethanol plants pumping out low-carbon fuel, injecting millions of dollars into local economies, supporting thousands of direct and indirect jobs and extending gasoline supplies with homegrown, renewable fuel. When oil prices doubled in less than eight months in 2008, Merrill Lynch reminded consumers that without ethanol, fuel prices would have been 15 percent higher. That's 50 cents a gallon today, with oil at $90 a barrel and climbing.
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