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Wednesday, May 30, 2007
The ethanol mandate will have long-lasting unintended consequences as the impact of a potentially permanent increase in the price of corn ripples through the economy, particularly the agricultural sector. I have commented before that a) it is not a good idea for the government to "pick a winner" and b) the ethanol mandate will make a lot of food products more expensive (although by how much is an empirical question).
This paper titled "Emerging Biofuels: Outlook of Effects on U.S. Grain, Oilseed, and Livestock Markets" tries to take a crack at preliminary forecasted impacts of the ethanol mandate. I haven't had a chance to read the entire paper, however if the abstract is an accurate portrayal of what's in the body of the paper, here's what the authors found:
If sufficient demand for E-85 from flex-fuel vehicles is
I wonder how an increase of $4.40 per bushel of corn would affect E-10 fuel prices. I skimmed the paper, but did not see any prediction of how much the increase in corn prices would increase fuel prices.Post a Comment
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