One Ethanol Mystery Solved -- December 6, 2014

Do me a favor.

Go to this link (http://www.eia.gov/petroleum/weekly/gasoline.cfm).

Then scroll down and look at two graphs regarding ethanol.

Note that ethanol reserves in the US decreased (that I expected).

The amount of ethanol produced by the US is increasing significantly (second graph). That I did not expect and could not explain.

Until now.

A reader sent me this link. Bloomberg is reporting:

The U.S. is adding ethanol to the list of fuels it dominates in world markets.

Exports of the additive derived from corn rose 31 percent this year to the highest level since 2011, meeting demand from South Korea to Persian Gulf oil producers. The growth in sales follows a tripling of gasoline and diesel exports since 2009.

While the shale-oil boom created a stream of refined products flowing overseas, the ethanol surge is being driven by record crops. The U.S. is producing about 66 million metric tons more corn than a decade ago, almost as much as the rest of the world will export this year. Global demand for U.S. ethanol is helping ward off a glut after the government eased obligations to blend the fuel with gasoline. 

I think this is incredibly cool. It takes slightly more fossil fuel energy to produce a similar amount of ethanol which is good for fossil fuel investors.

But even more so, this is huge for American farmers, exporting fuel made from food. I think North Dakota farmers are taking more virgin prairie and converting it to corn. Same with wheat; taking wheat out of production and going to corn where the prices are better. That, of course, changes from year to year, and I'm not going to bother confirming my worldview/myth with data.

[Later. About that comment about farming corn instead of wheat, regarding the 2014 North Dakota corn harvest, from agweb:

North Dakota has increased corn production more than any other state in the past decade. “Replacing 60-bu. wheat with 120-bu. corn doubles the grain volume."]

I could be wrong, but I think most people associate "green energy" / ethanol with one US political party more than the other US political party. Warren, shipping ethanol and corn by railroad, certainly supports "green energy" / ethanol. No wonder he supports Hillary; it makes good business sense. For investors, this is an open-book test.

This is part of Obama's "from all the above (except coal)" energy plan. I love it.

We can't export crude oil but we can export ethanol. Congress works in mysterious ways. LOL.

The smartest thing Iowa ever, ever did was declare itself the first primary.