USDA: High Oil Prices Push Up Food Prices More Than Biofuels

Biopact reports:

First-generation biofuels like ethanol made from corn and biodiesel from rapeseed have effects on food prices. However, new evidence from the U.S. Department of Agriculture (USDA) suggests high oil prices play a much larger role in this trend. The situation is far more complex than some want to believe, because some biofuels even succeed in pushing inflation down. Researchers point at the situation in Brazil: there inflation indices have dropped because of record ethanol output and record low prices for the biofuel. Competitive biofuels bring down costs for all the economic sectors that would otherwise have to rely exclusively on very expensive oil products. More . . .

Comments

[GreyFlcn]

Yes it is tied to the cost of oil. But NOT due to the marginal increase in production costs.

But because ethanol is an "oil alternative" it shares the same functional value as oil.

So as the value of oil goes up, the value of ethanol goes up with it.

_

The trick being people like BioPact just try to say that it's just a marginal increase in production cost, when it's not.

[JohnBo]

Grey mentioned: ‘But because ethanol is an "oil alternative" it shares the same functional value as oil. So as the value of oil goes up, the value of ethanol goes up with it.’

Grey, the converse is also true. As the price of ethanol goes down the price of oil goes down. It has happened in Brazil and it can happen world wide if ethanol production increases and it remains cheaper to produce that the current price of oil based fuel.

[mike]

Ethanol isnt cheaper. At least when you consider lower mileage

[BornInZion]

Demand for corn/ethanol has pushed corn prices up.
More acreage is devoted to corn, displacing alternate crops. Lower harvests of alternate crops has increased their value.
It is all a very straight forward supply/demand situation.

[joe johnson]

What's the big deal about high oil prices? All the right people are getting rich, ay? Besides, the people in power to make change are unaffected by the price at the pump.
Speaking of the pump prices, I know where everyone can get gasoline for 85 cents per gallon!! It's the best fuel you'll ever get, too. Where?? Kuwait!! Yes, sir!! The MIDDLE EAST is LIVING IT UP!!! The American consumer gets screwed every day by CEOs & Politicians that continue to get rich. Meanwhile, the Kuwaitis are driving Hummers, Ferraris & Maseratis, and paying 85 cents per gallon for top-grade unleaded. American lives were sacrificed 15 years ago in Desert Storm, so that OPEC, Republicans and Oil Companies could tap into the Kuwaiti oil fields and get rich, rich, rich for decades to come. Naturally, they're making the Kuwaitis rich, too, giving them the chance to live in 7,000 sq. ft. homes & oppress people from all over the world. Yes, sir = Saudi Arabia had slaves until 1962, and for all practical purposes, it still exists over here. So, every time you fill up your big luxury cars & trucks, remember that another Indian or Pakistani maid is quite likely getting beaten and/or raped (documented cases) under the oppression of her Kuwaiti "employer", and your Exxon CEO is setting up his $5BILLION retirment package,... AND your local Congressman is filling up HIS Lexus on YOUR tax dollars! Ain't America wonderful!?!?

[Vending Man]

I think its ridiculous that oil and gas and all that affects food and such even though i do understand why it does. We need to find a new source of fuel though fast and i've heard a lot of ideas that they are thinking of and just can't wait for them to come out.

[anonymous]

“Oil Shock”
Even as the Economy Reels, a Golden Opportunity is at Hand
For more than a year the U.S. economy has been reeling from the housing and credit crises, but now it’s staggering from the blow of rising energy and food prices. The impact of $4-a-gallon gasoline is rippling outward as Americans cut spending of all sorts. Every month it seems as if another major economic sector hits the skids: first it was housing and construction, then automobiles and airlines, then tourism and, finally, back to housing with the implosion of Fannie Mae and Freddie Mac.
What ties all these crises together is cheap energy, which drove years of suburban sprawl, SUV sales and big-box consumption. That’s all in the past, however. The United States consumes 12.4 million barrels of imported oil products a day. At $140 a barrel, that comes to $633 billion a year — a huge transfer of wealth to oil companies and oil-producing countries and four times the annual cost of the Iraq War.
Oil prices have surged six-fold since the 2003 invasion of Iraq. But with the housing sector on fire and profits robust, consumers and businesses were able to absorb the costs. Not anymore. In June, consumer prices rose 1.1 percent nationally and 1.2 percent in the New York region. Also in June, the producer price index, the inflation rate for businesses, rose an astonishing 1.8 percent. The inflationary effects are being passed through the commodity chain in price increases and job losses.
To view the rest of this article, see http://www.indypendent.org/2008/07/19/oil-shock/

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