Quote:
Originally posted by jluetjen
Fastpat, you must have been sleeping through economics in college.
1) Oil is a commodity. As such (in general) it doesn't matter where we specifically buy our oil, because oil is oil (excluding differences in sulfer content, but I digress). Oil is produced and consumed, that brings me to the other key point here...
2) Commodities are governed by supply and demand. So demand from the US creates demand in the mid-east, even if the US doesn't specifically buy it's oil from the mid-east. If the US were to suddenly stop consuming oil, the price of oil would drop in the mid-east (at least in the short term) because Canada would start to sell it's oil to the customers of the mid-east, thus driving down the price world-wide due to the excess of supply.
If the US were to start turning corn in to Ethenol, the reverse would occur. The value of corn would increase because of the extra demand. I'm not convinced that this is a bad thing since this would then allow the US farmers to make more money from their crops rather then being paid to plow crops under by the government. And as I said earlier, if corn syrup were not the cheapest sweetener on the market, that would be a good thing too in my book. And since most of the mid-east isn't suitable for growing corn, the amount of cash flowing into the region would dry up, thus draining the coffers of lots of the terrorests.
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John - you've left out one vital point to your analysis: China.
China, who expects to have employed by its people over 10 million cars in the next decade. Even if we do pull our needs from the Middle East, China will be there to supplant our absence, unless they too have a desire for ethanol. But that won't likely come from a country that is far more concerned with becoming industrialized than environmentally friendly.
If ethanol is used on a larger scale, I think there could be some damage on three fronts: one is the price of fuel. The second is the toll this new fuel might have on machinery. A third is the price of food, as corn is one of the main staples of the American diet.
So possibly our hands will be tied at the pump, at the mechanic, and at the dinner table.
Will the rise in corn production benefit farmers? I'm not certain it will benefit farmers as many farms are owned by corporate conglomeracies. I don't see how the traditional farm owner can gain a windfall if his property has already been purchased by a large company.