Biofuels: What’s Really Driving Food Prices?
Anyone who pays even casual attention to the biofuels industry has come across the “food versus fuel” argument, i.e., that the rise in biofuels comes at the expense of the world fuel supply. But as shown in this article: “What’s Really Driving Food Prices?” this is specious.
According to several of the speakers at the Renewable Energy Policy Forum I attended recently, the concept came from a brilliant albeit dishonest PR campaign in which Big Oil got together with a few of the most powerful people in Big Food and fabricated this credible but grossly distorted story. In fact, the real cost of food has a far greater connection to the cost of liquid fuels required to plant, fertilize, irrigate, harvest, process, and ship food. Biofuels’ effect in expanding the supply of fuel lowers the price of food far more than competing with the food supply increases it. Moreover, the biofuels industry has turned away from the use of edible crops (e.g, corn and soy beans) in favor of cellulosic feedstocks (e.g., corn stover). I hope readers will take a few minutes to read the article linked above, and familiarize themselves with the truth here.
There’s a funny thing about numbers, properly spun, they can prove almost anything if you “happen” to leave a few “insignificant details” out of the equation.
Craig,
It’s simply not that simple.
If you look at the total fossil inputs that go into farming corn (the ultimate food staple for the U.S.), you’ll see that a typical farm requires ~7 gallons of diesel.
http://www.extension.iastate.edu/Publications/PM709.pdf
From that, you get ~400-600 b of corn. At $4/gallon diesel, that means the petroleum cost portion of your corn is ~$0.05 – $0.07/b .
Yes farmers must use fertilizer to fertilize their fields… and fertilizer prices have increased by threefold. But the average acre of corn uses ~140 lbs of nitrogen, 60 lbs of phosphates, and 80 lbs of potash.
At current prices for anhydrous ammonia, “Super phosphate 44), and potassium chloride, you get the following price per fertilized acre of corn:
NH3 – $665
H3PO4 – $45
KCl – $27
All told, even at today’s prices the cost adder for corn is between $1.23 – $1.84 /b.
So the ramp-up of the price of petroleum (4 times the cost) and fertilizers (3 times the cost), have added a net total of ~$0.86 – $1.29 /b.
The cost of corn has increased by $6/b in that same time frame.
Clearly, something else is the dominate driver of the cost of corn. The presentation you attended was blatantly false. Food is a commodity, and as such its price floats on supply and demand. At this point, ~1/3 of the total amount of food grown in the world is used to meet demand from biofuels producers. That increase in demand has been the dominate driver in forcing the cost of food higher. It has dramatically increased revenue for industrial farming companies, and has dramatically increased the value of farmland.
There really is no valid dispute of this basic fact: biofuels have been the dominant driver of food cost for the past decade.
I forgot to link the source on fertilizer usage and costs:
http://www.ers.usda.gov/data-products/fertilizer-use-and-price.aspx#26727
Even if C2H5OH (ethanol) is not driving up food prices, there are other reasons to eschew it.
When a mixture of gasoline and ethanol absorbs water from the air (and it will, especially in humid climates, because ethanol is hygroscopic), the ethanol / water mixture separates from the gasoline and sinks to the bottom of the fuel tank. There it causes corrosion and, when it enters the engine’s fuel system, it causes corrosion there also and may make it difficult or impossible to start the engine. Repairing the fuel system can be quite expensive when it is damaged by corrosion.
This is especially a problem for vehicles and engines which are not regularly used. For example, a gasoline lawn mower is generally stored for several months at a time. Although the problem can be eliminated by draining the fuel system and blowing out all the remaining fuel, that was not generally necessary with pure hydrocarbon fuel. It is even a problem with cars and motorcycles unless they are regularly used, especially in humid climates.
Ethanol also damages some seals in fuel systems, especially in older vehicles which were made before fuels contained ethanol.
Now the government intends to approve, FOR USE IN NEWER VEHICLES ONLY, fuel that contains 15% ethanol (E15). Even though fuel station dispensers may offer a choice between E10 and E15, that is of no help when only small amounts of fuel are required since if the previous user selected E15 and you choose E10, considerable E15 will be left in the hose and pipes. That means that if your lawnmower or motorcycle requires only a small amount of E10, what you will actually get is considerably greater than E10; in extreme cases, it could actually be 100% E15. Of course that problem doesn’t exist for fuel dispensers that have separate hoses for the types of fuel, but many use only one hose to dispense all the types of fuel available.
Also, because of its somewhat corrosive properties, ethanol is not transmitted via pipelines. Instead, it is shipped by tanker trucks which are less efficient to operate and less safe.
E10 was originally proposed to reduce exhaust emissions. It may do so for some older cars that use carburetors and have no O2 sensors to control the fuel mixture accurately. However, all modern cars have fuel injection and O2 sensors to control the mixture. So, when E10 or E15 is used, the O2 sensor and fuel injection computer will simply make the fuel mixture richer to compensate; thus, exhaust emissions are little affected.
So, the evidence indicates that ethanol-containing fuels are inferior to pure hydrocarbon fuels and do cause problems for many people (though not all) who are forced to use them. They seem to have insufficient advantages to warrant producing them if in fact they have any advantages at all.
Frank,
I agree with your concern regarding infrequent use vehicles, but for our area at least there are stations that have dedicated pumps that have ethanol free gasoline. It costs more, to dissuade people from using it in cars (though there’s no reason to dissuade people from using it in cars)… but it’s available for lawnmowers and other infrequent-use machines.
Glen,
Thanks for the information. Unfortunately, I have been unable to find stations around here (Albuquerque) where ethanol-free gasoline is available.
Here is a list to the AMA’s take on E15 fuel:
http://capwiz.com/amacycle/issues/alert/?alertid=62418221&queueid=%5Bcapwiz:queue_id%5D
Ethanol may make sense in Brazil where it is derived from sugar cane, but I don’t believe that it makes sense here.
I suspect that within a few years, people will look askance at some of the decisions we’ve made and wonder why we ever made them.