jetpack domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /mnt/stor08-wc1-ord1/694335/916773/www.tvhe.co.nz/web/content/wp-includes/functions.php on line 6131updraftplus domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /mnt/stor08-wc1-ord1/694335/916773/www.tvhe.co.nz/web/content/wp-includes/functions.php on line 6131avia_framework domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /mnt/stor08-wc1-ord1/694335/916773/www.tvhe.co.nz/web/content/wp-includes/functions.php on line 6131First, high demand for maize is increasing production – there is a response. The US Secretary for agriculture expects a 10% increase in the US ‘corn’ crop from last year. So supply will expand to meet the demand, right? Well, perhaps. I’d note that further increases in the US maize crop will have to come from increasing the planted area – that is, planting maize instead of wheat. (And agricultural expansion in the rest of the world is tagged for meeting increased Chinese demand and population growth.)
We need to think about the relative sizes of the food and fuel markets. If we fermented all the food in the world to produce energy, the ethanol would substitute for about an eighth of transport fuels. Fuel from food is like trying to top up a bath from a bucket – a big change in the contents of the bucket makes only a small change in the water level in the bath.
In other words, relatively small changes in biofuel targets or in fuel consumption will cause much larger changes in food availability.
Second, although that 10% growth in maize production sounds impressive, it’s not so great compared to the growth in ethanol production. According to the US Renewable Fuels Association, the 1985-2010 *trend* growth in biofuels is 11.8% instantaneous (12%APR).
From 1997 to 2010, the endpoint-to-endpoint trend is 18.8% instantaneous (20.6% annual). Now, not all of that is from maize, but well over 90% would be.
If you chart the % of the US maize crop used for fuel, it’s exponential, and the “take-off” part of the curve was reached about two and a half years ago.
I would say that the volatility *is* mainly caused by the underlying structural shift. It’s just compound growth at work.
Perhaps, Matt, you would have a bigger problem with biofuels if food expenditure was over 35% of your income, as it is for much of the world. Many people will literally starve if markets are used to equilibrate supply and demand at the “right” price. Demand isn’t the same as need, unfortunately.
]]>I’ve got no problem with biofuels as long as carbon is priced appropriately and people then decide to supply them – my issue is with compulsion. Get the pricing right and the results will follow 😉
Of course, that means getting the political will to get the pricing right
]]>Ironically, just as many in the US are saying that ethanol is a scam, along comes oil price and supply instability!
JC
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