Saturday, August 17, 2013

Ethanol

Occasionally the government steps up and demonstrates its ability to not just shoot itself in the foot, but to do so with the selector switch on full auto. Effective August 1, President O'Bungler has issued an executive order banning the sale of Ammonium Nitrate in this country.

Obama issued an Executive order on August 1, 2013 that will effectively ban Ammonium Nitrate in the USA. It will become too expensive and create too much possible civil and criminal liability to manufacture, store, or transport it.

While it is true that AN is a primary component in several explosives, it is also true that AN is a primary component of practically all farm products including the grains fed to meat animals. As an aside, notice that some 40% of the nations corn crop is now dedicated to producing ethanol which by law must be mixed into your gasoline, lest we become overly dependent on Arab oil for our cars. Already it is required that some 2M gallons of the moonshine mixed into our gas must come from cellulostic sources, a sop to the drain on food and feed that the current law imposes. Any refinery not mixing the required minimums from this source is penalized by requiring them to buy a tax credit, currently valued at about $1/gallon of 'shine not used. This adds about a dime to the price of a gallon of gas at the pump.

Current total national production of cellulostic ethanol is 20,000 gallons/year. Not to worry, the 1.98M gallon shortfall will be paid for by the peasants. Now imagine the hit to corn (and everything else) production the proposed ban on fertilizer will have:

Food and fuel prices will skyrocket because Ammonium Nitrate forms the basis for almost all nitrogen in granular fertilizers used in American farming. There are no cost and ease of manufacture/use equivalents for ammonium nitrate. Supply and demand economics are going to be the harsh lesson of the day. Crop yields will go down. Corn is the basis for the American food supply and the fuel additive ethanol. A.N. is critical in corn production.

Hope everyone is ready for $12/gallon gasoline and $20 a box corn flakes.

Read the whole sad story here at CSIA foundation.

2 comments:

Brad K. said...

Keep in mind that food, including corn, makes up a significant part of America's foreign policy. A significant amount of "foreign aid" is so-called "surplus" corn, shipped as food to other nations.

Recent years when world food fell short (like when the weather/political landscape became erratic) there were food shortages -- several of which focused on demands on food to be shipped from the US to fill the world's needs. Which is not too surprising, since the US has a long habit of shipping, or shorting, food to various locales to support/destabilize those that we call enemies/friends/"special interests".

Yes. Tampering with American agriculture like this could lead to armed conflicts, possibly involving US troops and interests. Not to mention starvation here and abroad. Recall that the Obama administration has fudged harvest and supplies figures in the past, to ship grain for foreign policy/help buddies line their pockets when the US fell short, without regard to what empty grain bins mean to American food prices.

On the other hand, Chicago sent Obama to Washington, D.C. I wouldn't be surprised to find this is a short-term tactic intended to ruin some one opposed to Obama or one of his backers.

Billll said...

While Mr Obama is certainly capable of using the system ot boost his friends and punish his enemies, this sounds more like one of Mao's ill advised national policies such as the Great Leap Forward boondoggle that demanded that every province in China become economically and agriculturally self sufficient.

Never mind that certain agricultural enterprises worked better in provinces that had, for example measurable rainfall, or that steel mills worked best in provinces with say, coal or Iron ore.