With oil prices climbing relentlessly - much to the dismay of analysts who thought demand would tail off above $100 or so - most of the clamor is understandably unhappy. And the forecast is even more alarming.
But in her inaugural post at Biofuels Update, TP editor Jeanne Bernick shares some new perspective from one of my favorite ag economic myth-busters, Bruce Babcock, who told legislators:
" ...that changes in federal biofuels policies now will not have a dramatic effect on food prices in the short term. And in the longer run, corn and food prices will be determined largely by the price of crude oil."Biofuels proponents will undoubtedly seize on this opinion as a reason not to touch the the government training wheels for the ethanol industry, since it wouldn't help food prices much.
I think that would be reading it backwards. Here's the key conclusion for me:
Second, in the long run, if gasoline prices rise even higher and signal that we need alternative fuels, the corn ethanol industry will expand well beyond current projected levels even without government subsidies, unless production is somehow capped. [More]What we are staring in the face is a gold-plated (or oil-smeared) opportunity to bullet-proof the ethanol industry from the whims of legislation and popular belief. We could lose the subsidies and never look back.
Best of all we can start working at our real profession - growing things people want to buy - instead of trying to manipulate government officials and consumers with spin and pathos.
Just think about it. Critics can write or say anything they want, and we won't even have to listen. We'll just answer to the market.