Wednesday, June 28, 2006

Corn shortages in Minnesota because of ethanol?

A couple of months ago, a knowledgeable commentor told me that Minnesota was able to meet the ethanol demand for corn without growing one additional acre of corn. That may not be the case for long:

For decades corn has been plentiful and forecasts offer little reason to think that will change. Ethanol production used one-eighth of the corn crop in 2005, and state officials had predicted that figure would rise to one-sixth by 2012.

But nobody predicted today's ethanol explosion, as oil prices soared and ethanol became liquid gold. If all the factories now seeking permits are built, ethanol soon will consume more than 40 percent of Minnesota's corn crop. That will rise to 50 percent if the wave of plants now on the drawing board are built. A possible third wave of plants, cited by pollution-control officials, would bring corn usage to nearly 60 percent.

In Iowa, the effect is even more dramatic. There, some 55 ethanol plants are open or proposed, and "if all these plants are built, it would use virtually all the Iowa corn crop," said Iowa State University economist Bob Wisner.

Ethanol may or may not be here to stay, but don't for a second think it is the miracle alternative to oil and gas. It is going to have its own attendent problems.

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