A news conference was held introducing the Open Fuel Standard Act, which would require that starting in 2012, fifty percent of new automobiles, and starting in 2015, eighty percent of new automobiles, be flex fuel vehicles made to operate on gasoline, ethanol, and methanol. Sen. Sam Brownback (R-Kan.) began by saying that the U.S. urgently needs to lessen its dependence on foreign oil. Brownback said that the solution is an easy one which would require no need for new inventions, but simply a switch to flex fuel vehicles. He explained that this enhancement comes at a reasonable price and would only add $100 per vehicle during creation. Brownback said that this is the “way to do it” — the way to start ending America’s addiction to oil. (more…)

Corn, apparently, is many things. It is animal feed, human food, and ethanol. I spoke with George Chadima in Fairfax, a farm owner near Cedar Rapids, Iowa. Excessive moisture has caused the nitrogen to be leeched from the soil, which is requiring farmers to buy biologically active fertilizer. The corn that was planted already has been “drowned” by water pooling in areas, and much of the rest was also damaged by a recent hailstorm. Crops, he said, would probably yield 75-80% of what they normally do.

I was shown a warehouse that housed large containers of soybeans yet to be planted. The planting schedule is three weeks behind already due to the weather, and hopefully, he said, they’ll be able to plant within the next couple of days. This is happening to many farmers in Iowa, and the result is going to mean higher prices- in everything.

Corn prices, of course, will go up, since using corn for “human food” or exporting it elsewhere, essentially removes corn from the chain of production. Ethanol, surprisingly, does not create that problem, because after the grain alcohol is removed there are still co-products from the corn, such as animal feed, plastics, and oils. The chain of production includes feeding that corn to animals, and then using the byproducts as fertilizer. Because it is costing more to harvest the corn, and there will be less of it, this will cause beef prices to rise.

The Senate Foreign Relations Committee held a hearing on “Responding to the Global Food Crisis,” focusing in particular on U.S. agricultural investment in foreign nations and how the development of corn-based ethanol and other biofuels have contributed to the rise in food prices.
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