• The USDA began reporting on U.S. Census Bureau data regarding the amount of fats and oils devoted to biodiesel. In Jan. 2007, 220 million pounds of all fats and oils were used for biodiesel. By July, this number had climbed to 392 million pounds, an increase of 78 percent.
• The July average price for soybean oil in central Illinois was 34 cents per pound compared with 25.7 cents in June.

Meanwhile, a New York Times article focuses on sugar producers in the U.S. and a provision in the Farm Bill that would subsidize domestic sugar producers. The subsidies would keep U.S. sugar competitive with sugar imported from Mexico. Sugar producers say the sugar could be used for ethanol production to offset high oil prices, but ethanol producers are “unenthused.”

Fred Below, plant physiologist at U of I, calls it the “sugarcane of the Midwest.” More testing needs to be done to determine whether sugars extracted from the plant can support ethanol-fermenting organisms. But if they can, tropical maize could be a source of cheap and clean ethanol.

Another nugget from the article: solar power is ten times more efficient than corn-based ethanol in terms of the amount of the Earth’s surface devoted to producing energy. The article predicts a massive clearing of forests if cheap, low-maintenance ethanol production techniques are developed.

“The industry’s growth has meant that a larger and larger share of corn production is being used to feed the huge mills that produce ethanol. According to some estimates, ethanol plants will burn up to half of U.S. domestic corn supplies within a few years. Ethanol demand will bring 2007 inventories of corn to their lowest levels since 1995 (a drought year), even though 2006 yielded the third-largest corn crop on record. Iowa may soon become a net corn importer”

“According to Vernon Eidman, a professor emeritus of agribusiness management at the University of Minnesota, higher feed costs have caused returns to fall sharply, especially in the poultry and swine sectors. If returns continue to drop, production will decline, and the prices for chicken, turkey, pork, milk, and eggs will rise. A number of Iowa’s pork producers could go out of business in the next few years as they are forced to compete with ethanol plants for corn supplies.”

“Unlike oil imports, which come into the country duty-free, most ethanol currently imported into the United States carries a 54-cents-per-gallon tariff, partly because cheaper ethanol from countries such as Brazil threatens U.S. producers. (Brazilian sugar cane can be converted to ethanol more efficiently than can U.S. corn.)”

“In a study of global food security we conducted in 2003, we projected that given the rates of economic and population growth, the number of hungry people throughout the world would decline by 23 percent, to about 625 million, by 2025, so long as agricultural productivity improved enough to keep the relative price of food constant. But if, all other things being equal, the prices of staple foods increased because of demand for biofuels, as the IFPRI projections suggest they will, the number of food-insecure people in the world would rise by over 16 million for every percentage increase in the real prices of staple foods. That means that 1.2 billion people could be chronically hungry by 2025 — 600 million more than previously predicted. “

“Nor is corn-based ethanol very fuel efficient. Debates over the “net energy balance” of biofuels and gasoline — the ratio between the energy they produce and the energy needed to produce them — have raged for decades. For now, corn-based ethanol appears to be favored over gasoline, and biodiesel over petroleum diesel — but not by much. Scientists at the Argonne National Laboratory and the National Renewable Energy Laboratory have calculated that the net energy ratio of gasoline is 0.81, a result that implies an input larger than the output. Corn-based ethanol has a ratio that ranges between 1.25 and 1.35, which is better than breaking even.”

“The benefits of biofuels are greater when plants other than corn or oils from sources other than soybeans are used. Ethanol made entirely from cellulose (which is found in trees, grasses, and other plants) has an energy ratio between 5 and 6 and emits 82 to 85 percent less greenhouse gases than does gasoline.”

Chew on that awhile.

In a contrasting view Marlee Johnson, executive director of the Illinois Beef Association, said in an interview recently that the ethanol industry is, in fact, a boon to the beef industry in Illinois. The reason? Most of the beef producers in the state are also corn growers.

“It behooves us to work together on realistic goals,” Johnson said, “and make it work to the benefit of all of us.”

The local press emphasized that the plant will produce jobs in the area and increase demand for crops–the facility will consume about 600,000 acres of canola per year. Canola-based biodiesel production is still a developing industry, and subject to most of the same criticisms as corn-based biodiesel production. Namely, that an increase in any kind of crop production will increase the stress placed on natural resources like water as well as increase the use of pesticides and other industrial chemicals.

A spokesman at the Illinois Department of Agriculture was baffled by the report, and questioned its legitimacy. Ethanol production is strictly monitored, he said, and that hearings are done before the installation of any new facilities.

“Before you even try to get a plant or group together to get an ethanol plan, you ask, “Do you have enough corn, water, transportation? If not, you don’t build the plant,” the spokesman said

“Businesses don’t own the sky, the public does, and if we want them to stop polluting it, we have to put a price on all pollution.”

Interesting, considering I just read the following nugget in a primer on economics for journalists:

“The other reason for market failure is a lack of the necessary components of a market. Pollution occurs because property rights don’t exist. If the price to me of polluting the air is zero, I will overpollute. In other cases, the necessary information for markets to function effectively doesn’t exist. In still others, there is insufficient competition. In none of these cases is the market failing. Rather, the market does not exist.”

It seems Barack knows at least as much about economics as a journalist should know.