Ethanol and world markets

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Thread: Ethanol and world markets

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    Ethanol and world markets

    I have started many threads about the positive economic impact that ethanol production has on the U.S. economy. It has produced countless thousands of jobs (which more than offset the tax breaks that ethanol blenders get), and it has revitalized small town farm economies and manufacturers of everything from tractors to ethanol factories.

    I have always been a proponent of ethanol for another reason: it reduces the flow of dollars to countries that support groups that want to fly airplanes into skyscrapers. But America has another problem: it owes China a trillion dollars and every year consumers give China countless billions of dollars for cheap junk.

    Now I come across this story:

    China moves to become major ethanol exporter
    China will export at least an estimated 500,000+ tons this year (about 11,000 barrels a day), according to Reuters. The exports may even reach over 900,000 tons this year, up from about nothing last year. Most of this ethanol is sent to the United States. Two factors may influence the boom: the fact that China needs to import cassava to use as biomass and the continuing ethanol plant boom in the U.S.

    The Chinese government is playing a large role in building ethanol plants in China, since there were only four until 2005. One Beijing-based international house trader said there are a few thousand ethanol producers in China today. The government is also encouraging producers to use non-grain crops like cassava as a feedstock. One company, China Songyuan Ji'an Biochemical Sales Co. Ltd., told Reuters it would export all of its ethanol output - 300,000 tons - this year.
    So this is what free trade gets us: We are becoming more and more dependent upon China for our energy. This will cause our trade deficit to grow. Because Americans are not being employed to make this ethanol, the government will not receive any employment taxes, which means it will have to sell more treasury bonds (to China), so we will be even more in debt.

    But wait. It gets worse. Think about this the next time you complain that union workers are fat and lazy and deserve to be laid off because Chinese workers are harder working:

    Police in northern China say they have now arrested more than 160 people accused of involvement in slave labour in illegal mines and brick factories.
    Among them is the foreman of a brickworks in the northern province of Shanxi, who had been the subject of a nationwide manhunt.

    Almost 570 people trafficked as slaves - 50 of them children - have been freed in Shanxi and neighbouring Henan.
    http://news.bbc.co.uk/2/hi/asia-pacific/6761217.stm

    That's right. You work hard for your money, and you as an American have a right to buy whatever you want from wherever you want.

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    Re: Ethanol and world markets

    US farmers are the most efficient in the world. High level of mechanization, high-tech (GM seeds, modern harvesters, fertilizers), large farm sizes make US farmers the most productive in the world. China has an edge in areas where the labor cost content of a product is high. That is not the case with most ethanol feedstock. In any case making ethanol from corn is a waste of time. With an energy yeild of 1.3:1 the money still goes to " countries that support groups that want to fly airplanes into skyscrapers. ". BTW last time I checked Al-Qaeda was plotting to overthow the Saudi Government. So maybe you would like to change that statement from "countries" to "individuals".

    Edit: A treasury bond is a piece of paper. US can refuse to honor it or freeze assets in case of an emergengy. The fact that the Chinese are buying them indicates their trust in the US financial system. In effect they are putting the money they earned back in the US. This is a good thing.
    Last edited by agman25; 01-29-2008 at 09:58 AM.

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    Re: Ethanol and world markets

    This is good news. Energy diversification is a good thing - obtain your energy needs from a variety of sources, not just from one sector or from one geographical (or political) region. Second, increased supply will help mitigate rising prices due to the increased energy demand that is happening anyways.

    Yes, in a perfect world we could all of our ethanol from Iowa and all our oil from Texas...but, alas, we live in a global economy. Better to have more sources and more energy than less...
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    Re: Ethanol and world markets

    What's the net yield of energy input needed to produce a gallon of gas?

    Is the sea tanker and it's associated fuel use to transport the crude to US shores calculated within?

    Is the energy used by oil refinery calculated as well to the figure?

    Simply comparing size of an oil refinery next to an ethanol refinery is stagering. Thus the question.

    Using corn as to excuse ethanol from being a viable alternative just doesn't fly anymore. There's a laundry list of other sources and methods to turn non-food sources into fuel.

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    Re: Ethanol and world markets

    Quote Originally Posted by Hurricane View Post
    This is good news. Energy diversification is a good thing - obtain your energy needs from a variety of sources, not just from one sector or from one geographical (or political) region. Second, increased supply will help mitigate rising prices due to the increased energy demand that is happening anyways.

    Yes, in a perfect world we could all of our ethanol from Iowa and all our oil from Texas...but, alas, we live in a global economy. Better to have more sources and more energy than less...
    China imports cassava, turns it into ethanol and then ships the value-added end product to the U.S. Please explain how this is better than the U.S. importing the cassava, having Americans turn it into ethanol, keeping the added value in the U.S. economy and taxing the American labor.

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    Re: Ethanol and world markets

    I think we will depend less and less on China's ethanol exports as our manufacturing levels grow. Right now ethanol production in the U.S. is still in its infancy, as we improve the process and make it more efficient, it may actually cost more to import than it does to make it at home.

    Also, according to the figures stated, China is only producing 176 million gallons of ethanol per year. Even if that doubles, their production is still less than 10% of what we currently produce.

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    Re: Ethanol and world markets

    Quote Originally Posted by jkennedy293 View Post
    I think we will depend less and less on China's ethanol exports as our manufacturing levels grow. Right now ethanol production in the U.S. is still in its infancy, as we improve the process and make it more efficient, it may actually cost more to import than it does to make it at home.

    Also, according to the figures stated, China is only producing 176 million gallons of ethanol per year. Even if that doubles, their production is still less than 10% of what we currently produce.
    Plus, with the rapidly growing Chinese economy, they're going to need to keep the fuel they produce for themselves.
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    Re: Ethanol and world markets

    [QUOTE=

    Edit: A treasury bond is a piece of paper. US can refuse to honor it or freeze assets in case of an emergengy. The fact that the Chinese are buying them indicates their trust in the US financial system. In effect they are putting the money they earned back in the US. This is a good thing.[/QUOTE]

    A Treasury Bond's greatest value is the guarantee of payment. Without that promise, they're junk and the government won't be able to sell them. They HAVE to pay up in order to borrow more.
    Ed

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    Re: Ethanol and world markets

    Quote Originally Posted by agman25 View Post
    ........ A treasury bond is a piece of paper. US can refuse to honor it or freeze assets in case of an emergengy. The fact that the Chinese are buying them indicates their trust in the US financial system. In effect they are putting the money they earned back in the US. This is a good thing.
    If the US refuses to honor that "piece of paper", nobody else holding US treasury bonds will have any faith in them, and nobody will buy any in the future. The US honoring that "piece of paper" (same as the dollars in your wallet and your bank) is why it has value.
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    Re: Ethanol and world markets

    Quote Originally Posted by HoosierRon View Post
    China imports cassava, turns it into ethanol and then ships the value-added end product to the U.S. Please explain how this is better than the U.S. importing the cassava, having Americans turn it into ethanol, keeping the added value in the U.S. economy and taxing the American labor.
    I never said the U.S. couldn't or should produce ethanol. I am talking about additional capacity.

    Can the Chinese produce it cheaper? If so, then it would be beneficial to the U.S. economy. Cheap energy is a good thing - both to industry and to the consumer.
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    Re: Ethanol and world markets

    Quote Originally Posted by agman25 View Post
    fact that the Chinese are buying them indicates their trust in the US financial system. In effect they are putting the money they earned back in the US. This is a good thing.
    Start worrying when our economy is so bad that the Chinese don't want to invest in it. Foreign investment is a good thing!
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    Re: Ethanol and world markets

    Quote Originally Posted by Hurricane View Post
    Start worrying when our economy is so bad that the Chinese don't want to invest in it. Foreign investment is a good thing!
    Buying treasury bonds is not investment in our economy. The government does not produce anything. It does not create any wealth. Our children will be taxed to pay the interest that China will receive. That means there will be less money left in the U.S. economy to actually invest.

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    Re: Ethanol and world markets

    Quote Originally Posted by Hurricane View Post

    Can the Chinese produce it cheaper? If so, then it would be beneficial to the U.S. economy.
    No, buying ethanol from China rather than the U.S. is not beneficial to the U.S. economy. If I send $1 to China in exchange for a gallon of ethanol, China now has wealth. I will consume the ethanol, and the U.S. will have nothing.

    However, if I buy $1 worth of ethanol in the U.S., that dollar will be used to:

    1. Employ workers at the ethanol factory

    2. Employ workers to build new ethanol factories

    3. Employ engineers to design new ethanol factories

    All of these employees will work. Their labor will be taxed. That helps the U.S. government reduce its debt.

    The U.S. workers (unlike Chinese workers) will take their income and buy goods and services from fellow Americans. This will create even more jobs and more tax revenues. Here is an example. Farmers are making profits because of the increased price of corn. Farmers buy tractors. Look at the price of John Deere stock in the past 5 years:



    So now all of the American shareholders of John Deere stock are wealthier because my $1 went to an American ethanol producer rather than China.

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    Re: Ethanol and world markets

    God forbid a hard working American farmer should make any money...
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    Re: Ethanol and world markets

    Quote Originally Posted by HoosierRon View Post
    No, buying ethanol from China rather than the U.S. is not beneficial to the U.S. economy. If I send $1 to China in exchange for a gallon of ethanol, China now has wealth. I will consume the ethanol, and the U.S. will have nothing.

    However, if I buy $1 worth of ethanol in the U.S., that dollar will be used to:

    1. Employ workers at the ethanol factory

    2. Employ workers to build new ethanol factories

    3. Employ engineers to design new ethanol factories

    All of these employees will work. Their labor will be taxed. That helps the U.S. government reduce its debt.

    The U.S. workers (unlike Chinese workers) will take their income and buy goods and services from fellow Americans. This will create even more jobs and more tax revenues. Here is an example. Farmers are making profits because of the increased price of corn. Farmers buy tractors. Look at the price of John Deere stock in the past 5 years:



    So now all of the American shareholders of John Deere stock are wealthier because my $1 went to an American ethanol producer rather than China.
    If everybody thought like that a lot of Boeing, Microsoft, Intel, Google, Monsanto employeees would be out of work. So, would a lot of farmers, whose cause you champion so much. (The US is a large exporter of farm products.) You might notice that all of these are hi-tech jobs.

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