All the talk about ethanol being our savior from higher energy prices down the road is a little misleading. As the U.S. tries to become more energy independent with alternatives like turning corn into ethanol, they are missing a very important result of that process.
While ethanol can be used as a gasoline additive (10%), using ethanol in any greater capacity can create a snowball effect on the prices of the other products made from corn.
Obviously, as the demand for corn rises, so will the price for corn. Ethanol is nothing new, in fact it has been made from grain for thousands of years. Only in the last 20 years or so has Ethanol achieved popularity as an alternative for fuel.
So, if ethanol demand increases, and corn prices rise, it is natural to assume that the other derivatives from corn will do the same. So, what are the other products derived from corn?
Corn, once broken down, is separated into its various components which are starch, oil, protein and fiber. Once this is done, each component is converted into various products: Corn Sweeteners, Ethanol, Starch, Bio-products, Corn Oil, and Feed Products.
Let's take a look at some of the uses;
Corn Sweeteners: Sweeteners such as corn syrups, dextrose, and fructose come from corn. The are included in a variety of products such as ice cream, Salad dressings, condiments, lunch meats, canned fruits and vegetables, jams, jellies, chewing gum, breads, buns, rolls, soft drinks, and thousands of other food products.
In medicine, "the pharmaceutical industry is the single largest user of dextrose; it is the starting point for manufacturing vitamin C and is used in fermentation to produce penicillin and other antibiotics".
Ethanol: The signing of the energy bill last August mandated Refiners an MTBE to ethanol switch, and refiners are now completing the conversion of their refineries to include the product. "Ethanol-blended fuels account for 12% of all automotive fuels sold in the U.S".
Starch: Starch is a major product of our food and industrial economy. It is a necessary product in paper, textiles, surface coating, adhesives, oil drilling, and many chemical agents.
In food, starches are used to maintain the texture of food when freezing, thawing and heating. Many of our ready-to-eat foods are produced using starches.
Starches are also used in chemicals and plastics.
Bio-products: Uses include organic acids, amino acids, vitamins and food gums. Many bio-degradable plastics are also derivatives of bio-products.
Corn Oil: Uses include cooking oil, salad oil, margarines and shortenings.
Feed Products: Major feed products include corn gluten which is found in vitamins, minerals, poultry feeds, and pet foods.
So, as you can see, that becoming energy independent is not as easy as replacing oil with ethanol. Therefore, while ethanol may be touted as our saving grace, it cannot do so without creating a ripple effect of higher prices for a host of other products.
