“The endgame of biofuels is price parity between food BTUs and energy BTUs”

This quote comes from a comment beneath a story on Grist, Biodiesel in the dumps – original source (for me) of this article from the Atlanta Journal Constitution.

Biodistillers nationwide now realize that their industry’s survival depends on the vagaries of world trade. Cheaper soy and palm oil from Asia, Africa and Latin America increasingly replace domestically grown soy oil. Environmentally conscious Europe takes most of the U.S.-produced fuel.

Globalization of the American biodiesel industry, though, wouldn’t be possible without lucrative assistance — a $1-per-gallon tax break — from Washington. Alterra and other biodiesel producers receive the excise tax credit for each gallon of alternative fuel that is mixed with regular diesel.

And, since most of the biodiesel is shipped overseas, Congress essentially subsidizes the price European drivers pay for fuel.

“And we’re not really lessening our dependence on foreign fuel supplies,” said Mark Ash, an economist with the U.S. Department of Agriculture.

…

The blame falls mainly on the skyrocketing price of soybean oil used in 80 percent of the nation’s biodiesel production. Soy oil cost 22 cents per pound when Johnson broke ground in Plains. Wednesday, a pound cost 56.4 cents.

It takes 7.7 pounds of soy oil — or $4.34 — to produce a gallon of biodiesel, according to the Food and Agricultural Policy Research Institute. Add overhead and other processing costs (about 70 cents per gallon), federal and state taxes (54 cents) and subtract the dollar tax credit and a gallon of biodiesel could sell for $4.58 at the pump.

Regular diesel sold for $3.86 a gallon Wednesday in Atlanta.

“How’re you going to sell it at that price?” asked Davis Cosey, who owns an idled biodiesel factory in Perry. “The industry’s horrible. It’s in the ditch.”

Farmers aren’t doing producers any favors. In 2006, more than 75 million acres of soybeans were planted in the United States. Last year, only 64 million acres were planted, according to the USDA. Congress’ ethanol mandate — 37 billion gallons annually by 2022 — fueled the switch from beans to corn. In addition, rapidly developing China and India boosted soybean demand, and prices.

Interesting article (“Only federal subsidies keep the industry afloat” – one for the small-government-ers), if including odd lines like

“The American public, with rare exception, is 100 percent price-sensitive,” Johnson said. “They will not pay a penny more to go green.”

I kind of follow the argument – but 100% price sensitive? Dude, we’re all 100% price sensitive. It’s how sensitive we are that defines our markets (and in this “Johnson” is mistaken – of course we will pay more to go green. We just aren’t stupid enough to call something as daft as crop-grown biofuels shipped half-way ’round the bloody world and back “green”).

So US biodiesel manufacturers are importing soy and palm oil (the latter a truly horrible product, vis, the environment) in order to make biodiesel that is shipped to Europe because the market here is too small – meanwhile only surviving thanks to subsidies (meaning your tax dollars are subsidising European motorists).

Stop me when you can’t take the stupidity any longer.

So this would be where the comment came from. Personally I don’t fancy their chances, however much I agree with their sentiment. For a start food BTUs aren’t at all close to being adequately priced – but, then, neither are things like biofuels, oil shale, etc. Maybe one day. One day when we stop IV-subsidies to wasteful industries and make agriculture compete like everyone else.

Punk economics!

This is great. I forget how I even came upon this one (safe to say, though, that I was looking up something punk): Thompson S. (2001). Market failure: Punk economics early and late. College Literature 28(2) 48-65:

Punks and punk businesses have, at best, a conflicted relationship with commodification and capitalism, around which aggregates of anxiety coalesce in material form as punk `zines (fanzines), songs, liner notes, and activism launched against what punks perceive as the encroaching realm of capitalism. What I propose is that, after 1979, both in response to the initial “sell out” of punk’s late 70s English scene and in order to preserve control over their field of production, punks adopted economic strategies for resisting capitalism. In fact, the attempt to oppose commercial music in economic terms became crucial to the definition of punk in 1979 and has remained so through the present.

However, punk has failed and continues to fail, even on a relatively small scale, to overturn the dominant mode of economic production that is proffered it-the commercial practices of the major record labels. Punks are unable to absent themselves from commodification and small-scale capitalism; but, in their attempts to resist these economic forms, they fail commercially, which is a sort of punk success after all. In their continual effort and failure to establish a zone of exchange that is qualitatively different from late capitalist commodity exchange, punks testify to the need and desire for such a zone and refuse to abandon the possibility of creating one.

You know you want to. You know you can’t resist.