Energy News: Why you will pay more the gas pump soon

The U.S. Energy Information Administration report on causes at Rail congestion, cold weather raise ethanol spot prices:

Extremely cold temperatures this winter led to rail congestion in and out of midwestern terminals that delayed shipments to other regions and resulted in significant ethanol stock draws. Railcar dwell time, the time that loaded railcars spend in a terminal awaiting movement, at Burlington Northern Santa Fe Corporation’s Galesburg, Illinois terminal, which handles many ethanol cars from Iowa, nearly doubled in early 2014 to reach a peak of 60 hours in February and remain above year-ago levels.

While more than 70% of ethanol producers are equipped to load unit trains (trains running a single product), only about 35% of gasoline blending terminals are equipped to receive them. The average speed of manifest trains (trains running multiple products), which are often used to deliver ethanol to gasoline blending terminals that are not equipped to handle unit trains, decreased by 23%, from 22 miles per hour (mph) to 17 mph over the past 12 months.

Ethanol stocks were drawn down nationwide by nearly 2 million barrels (bbl) from mid-February to mid-March, partially recovering to 15.9 million bbl on March 28. This is more than 4 million bbl below typical March levels, which averaged more than 20 million bbl from 2011 through 2013. East Coast inventories were especially hard hit and on March 14 reached their lowest level (4.5 million bbl) since EIA began recording data in June 2010.

Ethanol, the gift that keeps on giving.

The EIA has a nice graph, though: 

Source: U.S. Energy Information Administration based on Oil Price Information Service (ethanol prices) and Thomson Reuters (RBOB prices).
Note: RBOB is reformulated blendstock for oxygenate blending gasoline, a motor gasoline blending component intended for blending oxygenates to produce finished reformulated gasoline.

UPDATE: Oh, "Illusion of Climate Fixing?" (that a label below) see "Downsides of ethanol spur Obama to urge reduced usage" from 2013:

The Obama administration on Friday proposed to reduce the amount of ethanol in the nation’s fuel supply for the first time, acknowledging that the biofuel law championed by both parties in 2007 is not working as well as expected.

I hope to shout. Pay more, get less. What a country.

Food prices at dangerous levels, says World Bank

BBC News - Food prices at dangerous levels, says World Bank:

The World Bank says food prices are at "dangerous levels" and have pushed 44 million more people into poverty since last June.

According to the latest edition of its Food Price Watch, prices rose by 15% in the four months between October 2010 and January this year.

Food price inflation is felt disproportionately by the poor, who spend over half their income on food.

So, what's driving these food price increases? There are some thoughts here:

The prices of wheat, corn and soyabeans have hit 30-month highs over the past few days after bad harvests, export restrictions, extremely low inventories and soaring demand in emerging countries and for bio-energy in the US and Europe.

Ah, the demand for "bio-energy."

As warned about here:

We are witnessing the beginning of one of the great tragedies of history. The United States, in a misguided effort to reduce its oil insecurity by converting grain into fuel for cars, is generating global food insecurity on a scale never seen before.

The world is facing the most severe food price inflation in history as grain and soybean prices climb to all-time highs. Wheat trading on the Chicago Board of Trade on December 17th breached the $10 per bushel level for the first time ever. In mid-January, corn was trading over $5 per bushel, close to its historic high. And on January 11th, soybeans traded at $13.42 per bushel, the highest price ever recorded. All these prices are double those of a year or two ago.

As a result, prices of food products made directly from these commodities such as bread, pasta, and tortillas, and those made indirectly, such as pork, poultry, beef, milk, and eggs, are everywhere on the rise. In Mexico, corn meal prices are up 60 percent. In Pakistan, flour prices have doubled. China is facing rampant food price inflation, some of the worst in decades.

In industrial countries, the higher processing and marketing share of food costs has softened the blow, but even so, prices of food staples are climbing. By late 2007, the U.S. price of a loaf of whole wheat bread was 12 percent higher than a year earlier, milk was up 29 percent, and eggs were up 36 percent. In Italy, pasta prices were up 20 percent.

So, it isn't bad enough that millions of people around the world have died from malaria due to a DDT ban that may not be justified (see here), we now seem to be helping to starve people.

And we may not be helping the environment all that much. See also Ethanol to take 30 pct of U.S. corn crop in 2012: GAO.

Stuck on stupid.

Ethanol May Add to Global Warming

Study: Ethanol May Add to Global Warming:

The widespread use of ethanol from corn could result in nearly twice the greenhouse gas emissions as the gasoline it would replace because of expected land-use changes, researchers concluded Thursday. The study challenges the rush to biofuels as a response to global warming.

The researchers said that past studies showing the benefits of ethanol in combating climate change have not taken into account almost certain changes in land use worldwide if ethanol from corn — and in the future from other feedstocks such as switchgrass — become a prized commodity.

"Using good cropland to expand biofuels will probably exacerbate global warming," concludes the study published in Science magazine.

Of course, we'll all feel better for allowing Congress to mandate higher ethanol levels, because, you know, we care. Even if we care too much to do a study and plan before we act...

More on unintended fallout from ethanol mandates: No new oil refineries, health effects, raising food prices, on grocery bills.

Isn't paying more for the same quantity involved with inflation?

Oh, and have I mentioned that ethanol actually reduces miles per gallon, so you end up having to buy more of it to travel the same distance? Or the lack of economies of scale in scattering tiny ethanol refineries about? I'll get there eventually.

Vote the rascals out!

Grocery bill increases? Some blame goes to ethanol...

Reported here:

Blame it on ethanol, gas prices and more demand for grain in China.

Ellie Arnold doesn't care about the causes. She just knows her monthly $300 monthly grocery budget is stretched to the max.

"That's what I budget at, and we're staying there," she said during a recent shopping trip at a local produce market. "I'm being real careful. Food is the only thing we can cut."

Her experience is becoming more common this summer as food prices in just about every category have increased.

Meat and dairy products have spiked the most, but processed foods have gotten more expensive because of the corn they contain. Some fruits, vegetables and frozen juices cost more because of bad weather in the growing regions.

In the Houston area, grocery prices rose 0.9 percent in July, on the heels of a 0.4 percent increase in June, according to the latest numbers from the Bureau of Labor Statistics. A basket of groceries that cost $100 in July 1984 and $183 a year ago would cost nearly $190 today.

Nearly two-thirds of Americans reported paying significantly more per week -- between $8 and $20 -- for groceries, according to a survey by America's Research Group. That's up from 53 percent in February and March.

One reason: ethanol
***
Corn prices have been about $3.50 a bushel, $1.50 more than where it has traded the past couple of years, said Joe Outlaw, co-director of the Agricultural and Food Policy Center at Texas A&M University.

Part of the rise in price is increased demand. About 14 percent of the U.S. corn crop is going to produce ethanol as an environmentally-friendly alternative and gasoline supplement.

"One of the reasons is ethanol," said Eugenio Aleman, a senior economist at Wells Fargo. "Of course, those who produce ethanol will tell you it's not, but these new uses of corn mean there will be more demand for corn."

Higher fuel costs translate to higher food prices because very little food gets eaten in the same part of the world where it is grown, said Aleman. Trucks and ships that move it from the farm to the grocery store need gas to make the delivery.

In addition to more corn going to ethanol, growing wealth in China and other developing nations means those countries have more money to buy food. In the wealthy U.S., disposable income goes to luxury items. Countries with smaller household incomes stick to the necessities, Aleman said.

"We buy flat-panel TVs," he said. "The Chinese and Indians buy more food."

Processed foods

About half of all U.S.-grown corn becomes feed for chicken, pigs and cows, Outlaw said. More demand for meat means more demand for corn. Again, prices rise, and Arnold's grocery budget gets even tighter.

One of the ways Arnold said she saves money is by buying raw ingredients and making food, including baked goods, at home. America's addiction to processed food also is dependent on corn.

Whether it's corn syrup, cornstarch, dextrose or another byproduct, some type of corn is in nearly every kind of processed food. It serves as a sweetener, a binder, a coater and a filler, among other things.

Although the obvious signs point to corn as the main culprit for higher prices at the checkout line, it's not quite that simple, Outlaw said.

Usually farmers alternate growing corn one year and soy beans the next. Seeing the growing demand -- and higher prices -- for corn as a fuel source, farmers planted more corn than normal this year, he said. Forecasts call for 13 billion bushels of corn to be harvested, up from less than 11 billion last year.

That means the soy bean crop will be smaller, and prices are up to $8.50 a bushel instead of the usual $5, according to Outlaw.

Like corn, soy beans are a staple in animal feed. They're also the source for a lot of vegetable oil -- another key ingredient in many processed foods.

An end in sight?

Again, higher prices for the ingredients and feed translates to higher prices for processed food, dairy products and meat.

Aleman and Outlaw tend to agree on the causes of higher food prices, but they're split on how long they'll last.

"We have to get used to it," said Aleman. "I don't think we are going to go back down."

Outlaw disagrees. The extra supply of corn should push prices back down this fall, as long as flooding, drought or some other disaster doesn't hurt the crop.

"If the current corn crop comes in like it's supposed to, corn will drop below $3," he said.