Discussion: Alternative fuel (Essay Sample)

Read other students' posts and respond. Please keep each one separate. In addition to other comments you may have, address the following in your response posts: What impact do the other students predict alternative fuel solutions could have on the current corn/ethanol crisis going forward? What other economic options could the government implement to solve these problems? Use any personal experience, if appropriate, to help support or debate other students' posts. If differences of opinion occur, debate the issues professionally and provide examples to support your opinions. Discussion 1: Some of the primary obstacles to efficiency of U.S. corn production are high cost, overproduction, and underproduction. Other obstacles are price regulation, quotas, and bans. Before the mandate the opportunity cost was an alternative use. There was a rapid increase in corn. But after the drought there was a decrease in production of corn. I believe the market for corn and ethanol was more efficient after the mandate because they were allowed to use 50% of the U.S corn production for producing ethanol instead of 40%. And the other 50% would be used for consumption in or as food products. So basically what it looks like the production balanced out. There wasn’t more of one good and service then the other. Discussion 2: Ethanol production in the U.S. has grown tremendously in the last decade. Most U.S. ethanol is made from corn. As the ethanol industry has increased its share of corn use, concern has developed relative to ethanol’s impact on corn price, and as a result other corn users. It is assumed the price of corn is determined by supply and the three sectors of demand. They are: corn supply, corn price, feed demand. Ethanol produced in the U.S. is derived mostly from corn. The primary consequence of an increase in the demand for ethanol as a gasoline fuel additive is an increase in the demand for corn. Greater use of ethanol would make a dent in the demand for oil, a pretty small dent. Moreover, many experts contend that burning ethanol will lower greenhouse-gas emissions. Another important reason why higher raw commodity prices cannot fully explain the rise in food prices is that the commodity component of the consumer’s food bill is relatively small. Over time, the farmers’ average share of total consumer expenditures for domestically produced food has dropped measurably.