It takes a nation to stockpile this much ethanol. No lie. It literally takes a nation. Find out which one here.

US ethanol stocks soar to 16-month high: EIA

US ethanol stocks rose 647,000 barrels to a 16-month high of 18.587 million barrels in the week that ended July 25 despite a slight decline in US ethanol production, which dipped 5,000 b/d to 954,000 b/d, US Energy Information Administration data showed Wednesday.

 As I like to do, I will put this into some perspective.

18.587 million barrels of ethanol equals 780,654,000 gallons of ethanol (42 gallons in a barrel).

One bushel of corn (56 pounds) produces 2.8 gallons of ethanol.

So, it took 278,805,000 bushels of corn (780,654,000/2.8) to produce the 18.587 million barrels of ethanol the US has in stock.

The stock of ethanol was produced from multiple corn plantings over time, so in many cases the same acreage was used to produce multiple harvests of corn.

In 2013, the average yield of corn per acre was 158 bushels.

This means, in the aggregate, the number of acres of corn needed to produce the current stock of ethanol was 1,764,588 (278,805,000/158).

How much is that? The total acreage of the US is 1,875,714. Virtually the whole US minus a couple of counties.

How many people could that feed?  Just askin'...

Note: Please remember my caveat---the same land would have to be used multiple times to get this amount of ethanol over time. I am not saying it literally takes the whole country.  Thanks!

How many football fields worth of corn did we use everyday last week to produce the surge in ethanol production? We're gonna need a bigger stadium...

Saw this and of course had to do some calculating.  You know how much hatin' I do on ethanol.

U.S. ethanol output surges to record high as gasoline costs rise (HT: Big Picture Agriculture)

U.S. ethanol production increased for the sixth week in a row to a record high, government data showed on Wednesday, as rising gasoline prices helped boost demand for the grain-based biofuel. 

Ethanol production surged 28,000 barrels per day, or about 3 percent, to an average of 972,000 bpd in the week ending June 13, according to the U.S. Energy Information Administration. Production surpassed the previous record of 963,000 bpd reached in the last week of 2011.

A "barrel" as a measure is 42 gallons. If production increased by 28,000 barrels that is 1,176,00 gallons of ethanol.

One bushel of corn (about 56 pounds) makes approx 2.8 gallons of ethanol.  It we divide 2.8 into 1,176,000 we get 420,000 bushels of corn needed for the extra DAILY production.

In 2013 the average yield on an acre of land used for growing corn was 158 bushels.

If we divide 420,000 by 158 we get 2,658 additional acres needed every day to support that "surge" in demand. Not the SAME 2,658 acres but additional 2,658 acres.

A football field is 1.33 acres.  Divide 2,658 by 1.33.

Last week we used the equivalent of 1,998 football fields for the extra 28,000 barrels of ethanol--EVERY.DAY.

There is a scourge 3 times larger than the drought affecting food prices. See it here in one easy chart...

The drought of the summer of 2012 is expected to result in the loss of 13% of the corn corp. This is widely reported as a disaster in need of immediate compensation. 

Forty percent (40%) of the corn crop will lost due to the Federal Ethanol Mandate (3 times as much as the drought).  This is narrowly reported as a problem and is ignored by politicians and policy-makers.

Why is this mandate still around, or at least modified? Just askin'...


Source: Coyote Blog

Food prices increasing? It is that #%*^&^& Ethanol policy! See chart here for the damage. Paging Frederic Bastiat!!

Congress has mandated (not asked, not requested) that the nation produce 13.3 Billion gallons of ethanol to be an additive to fuel.  Big Picture Agriculture estimates it takes 4.7 Billion bushels of corn to produce that much ethanol.
 
This number of bushels of corn WILL BE taken out of the market for ethanol production, regardless of the total number of bushels of corn harvested.  Read that again.

If the drought reduces the total harvest below expectations, then there will be less corn for the food/feed market. This will put upward pressure on the price  of everything else that requires corn as an input.

A consequence "unseen" to policymakers, but very "seen" to the "good economist" (go HERE for a short explanation. If you were a student of mine, you already know)...

What Percent of this Year’s U.S. Corn Crop Will be Required to Fulfill the Ethanol Mandate?

Source: Big Picture Agriculture

From HERE: 

''I’ve simplified the answer to the question by ignoring RINS credits and ethanol in storage, cutting to the crux of the issue. And of course, final corn crop production numbers are premature.

To do my calculation, I used the following:

• To produce the 13.2 billion gallons of ethanol mandated this year requires 4.7 billion bushels of corn.
• U.S. corn yields may average 117.6 bushels an acre this year, according to the results of a survey of 1,900 growers by Farm Futures magazine. This would amount to 9.86 billion bushels.

In 2013 the ethanol mandate will rise to 13.8 billion gallons, an increase of 4.5 percent over this year.

Unintended but predictable consequence of the Ethanol Mandate...

Source: Carpe Diem

Two nice graphics showing energy consumption by source. We are failing...

Reality Check.  As much as I would like the us to move to a cleaner and less political (by political I mean we dont have to go to war or maintain a military presence to get it) source of energy, this is the real world.

The first graphic shows the sources of fuel for electricity. The second one shows what we need for everyting else. Look how Oil "pops" from the first to the second. Oil is not only used for electricity production but also gasoline and it is an input into the production of many goods, like plastic.

With all the subsidies and other support we (and other rich countries) have put into alternative sources of energy, the dial on those has barely budged.  I  don't think I would even count the category "bio-mass". I am sure this includes the disasterous Ethanol policy.  Using food or even other organic matter for fuel has to be considered a no-go to meet our massive energy needs. 

Source: Wattsupwiththat

Source: Wattsupwiththat

Timely validation of my lecture yesteday on Lefties teaming with Righties on the issue of Ethanol...Not so much patting myself on the back as affirming I am not crazy... :)

This is the second time in two days I get validation of my rants against ethanol subsidies.  This is one issue that elements on the Left AND Right can come together to lobby against a Federal policy.  They are doing it for different reasons, but the goal is common none-the-less.

A Budget Plan That Treehuggers and Tea Partiers Can Love

""There's not much that Friends of the Earth and The Heartland Institute agree on. Friends of the Earth is among the most liberal of the environmental groups in the US. Heartland thinks that climate change isn't a crisis at all—actually, it might even be a good thing—and is the host of an annual Green Scissors Report, which looks at environmentally problematic government spending.  It's heartening to know that while two groups might not be able to agree on the question of whether or not climate change is real, they can agree that subsidies for corn ethanol are dumb.""

Ethanol is not the only subsidy they are teaming up to lobby against. Here is a list:

$4 billion in "royalty relief" for oil and gas drilling
$6.7 billion in a manufacturing tax break for domestic oil and gas companies
$22 billion for nuclear and uranium enrichment loan guarantees
$56 billion in tax credits and market support for ethanol
$1.3 billion in support for the FutureGen "clean coal" project
$18 billion in subsidies for commodity crops like corn, wheat and soybeans
$30 billion for crop insurance
$2.2 billion in tax breaks for timber companies
$20.8 billion in funds for road and bridge projects that they deem unnecessary
$5.6 billion in Army Corps of Engineers projects that "serve little to no national interest."

The cost of the Ethanol Mandate is not chicken feed....The Federal Government is bailing out chicken producers because the price of chicken feed is increasing---because of the Federal Ethanol Mandate. Does anyone else think this is kind of crazy???

How timely. Today in class I used the ethanol mandate as a way to illustrate Frederic Bastiat's "Seen and the Unseen" and the damaging effects of a policy gone awry, but not gone away.  While the article below is not about ethanol, there is a connection. See if you can find it...

U.S. places $40 million chicken order

""The United States is stepping in to help bail out another American industry -- chicken farmers and meat processors.

The nation's chicken industry is having a difficult year. Chicken producers are struggling with higher costs of running their business at the same time that consumers are buying less meat.

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This has created a glut of chicken products in the market.

The Department of Agriculture, keenly aware of these issues, announced Monday that it will make a special purchase of up to $40 million of chicken products, which the government will then donate to federal food assistance programs such as soup kitchens and its national Feeding America programs.

"At a time when the industry is under great stress due to the high cost of feed ingredients and the general economic slowdown, we appreciate USDA's willingness to step forward," the group said in a statement...."

Keeping in mind the focus of my lecture today I have to ask: WHY is chicken feed increasing in price? Anyone? Anyone? Anyone?

Graph of Corn used for Ethanol as a percentage of US corn production---posted with no comment...none needed...

WSJ using US Dept of Agriculture Data

Ok, rationality has left the building--to pass a tax bill that increases the deficit, Senate leadership offers incentives to reluctant Senators that will, well, increase the deficit...Will it ever end?

Why, oh, why does it have to be ethanol.  It is the one subsidy that has widespread support from the left and right to get rid of.  If they can't eliminate this one bad policy, I have little faith they can cut any spending on anything significant in the federal budget...Business as usual??

Reid Sweetens Tax Deal With Ethanol, Green Subsidies  

Senate Majority Leader Harry Reid, D-Nev., late Thursday unveiled a new version of the tax cut deal President Obama hammered out with Republicans. The package keeps the basic framework but adds several provisions clearly aimed at winning over wavering Democrats. Chief among them is an expansion of ethanol subsidies. The bill would extend existing tax credits on the additive as well as a tariff on imported ethanol.

What does ethanol have to do with expiring tax cuts? Well, Sen. Tom Harkin, D-Iowa., has slammed the deal but is also eager to preserve ethanol subsidies, a big deal in his corn-producing state.

The bill also extends tax credits for biodiesel and renewable fuels, energy-efficient homes, alternative fuels, manufacture of energy-efficient appliances, and investing in “alternative vehicle refueling property.” The provisions have been endorsed by the clean energy lobby and may help win over reluctant Democrats.

Additional article: Add-ons turn tax cut bill into 'Christmas tree'

For urban lawmakers, there's a continuation of about-to-expire tax breaks that could save commuters who use mass transit about $1,000 a year. Other popular tax provisions aimed at increasing production of hybrid automobiles, biodiesel fuel, coal and energy-efficient household appliances would be extended through the end of 2011 under the new add-ons.
The package also includes an extension of two Gulf Coast tax incentive programs enacted after Hurricane Katrina to spur economic development in Mississippi, Louisiana and Alabama.

#%#&#t^*(&# BLASTED Ethanol!! We are about to get more of it for our cars! That means less corn for food...I apologize in advance to all you starving people on "The Margin".

A nice example of interest group politics intersecting with economics.  Two interest groups (Farm Lobby and an ethanol lobby (fronted by a former presidential candidate) )exerting a disproportionate amount of influence over a policy that is roundly condemned by virtually everyone else on the planet, from the auto industry and consumer groups, to environmenalists. 

More Ethanol to Be Allowed in Cars

 "The agency's move is likely to be strongly challenged by livestock ranchers, auto makers and oil refiners. While the groups have varying motives for opposing greater corn ethanol production, they—along with many environmentalists—generally say the government hasn't conducted sufficient testing to warrant higher concentrations of ethanol in motor fuels...While the groups have varying motives for opposing greater corn ethanol production, they—along with many environmentalists—generally say the government hasn't conducted sufficient testing to warrant higher concentrations of ethanol in motor fuels. 

It is going to create a two-tier system at the pump...This won't cause any confusion...or will it?

"As early as Wednesday, the Environmental Protection Agency plans to announce it will allow ethanol levels in gasoline blends to be as high as 15% for vehicles made since 2007, up from 10% currently, according to two people familiar with the matter.  Anticipating such criticism, the EPA plans to also solicit comment on how gasoline pumps should be labeled, so as to avoid or reduce the potential that drivers will put the wrong fuel into their cars, the people familiar with the matter said."

So, pumps will have to be re-labeled and precautions taken by businesses to make sure people put the right gas in their cars depending on the year their car was produced.  When it is introduced, I am going to take a lawn chair over to my local Walmart and watch people figure out which gas pump to pull up to...I wonder if the warning label on the pump will  also have a number to call the EPA for inquiries...I would hate to be on the receiving end of those messages...