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World food shortage and the ethanol bubble

Posted Jul 7th 2008 1:27PM by Kevin Kersten (RSS feed)
Filed under: Archer-Daniels-Midland (ADM), Mexico, Deere and Co (DE), Politics, Commodities, Agriculture, Green Stocks, Bunge Ltd. (BG), Potash Corp. of Saskatchewan (POT)

We had the internet bubble and the real estate bubble and now, there is the ethanol bubble. Recently, I ran some numbers on ethanol and to my amazement realized that it is – too use a catch phrase from the environmental world -- not sustainable. Turning food into fuel is just plain silly; and when oil prices come down the ethanol bubble could pop big.

I ran did a little research and found some numbers:

47% of the Mexician' diet is corn
it takes 2.4 pounds of corn a day to feed a hungry person
it takes 22 pounds of corn to make one gallon of ethanol
there are 42 gallons of refined gas in one barrel of oil

Now, a little basic math can be very enlightening. To replace one barrel of oil, it takes 42 gallons of ethanol or (42x22)=924 pounds of corn. That is enough corn to feed one hungry person for (924/2.4) 385 days – a little more than one year.

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