Bush’s ethanol dreams make corn a hot commodity

Washington – When Americans fire up their grills for late summer barbecues over the next few weeks, a cloud will be hanging over them in the form of higher prices for steak, chicken and ribs.

The reason can be found in the rapid rise in the cost of corn, which is used not only as food for animals that provide meat, but also as an important basic ingredient used in the production of ethanol in the US.

President George W Bush unleashed the new popularity of ethanol when he set a goal to lower US dependence on foreign oil. The price of corn has shot up to nearly double 2005 levels in response to the increased demand.
It’s no wonder that ethanol refineries are springing up like mushrooms, particularly in mid-western US corn belt states. As of May there were 120 corn refineries countrywide and 75 more were under construction.

The White House’s fuel dreams are ambitious. In his State of the Union address in January, Bush set a goal of reducing petrol consumption in the car-loving country by 20 per cent in the next 10 years, largely by turning to ethanol and other alternative fuels.

Ethanol is already mixed in with gasoline, but it accounted for only around 3.5 percent of US fuel consumption last year. Reaching the goal of 15 per cent would require 133 billion litres.

Last year, one-fifth of US corn production was used for ethanol. That compares with 12 per cent two years earlier. Wheat and soybeans also cost more because land used to grow those crops is being turned over to grow corn.

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