Biofuels or a subsidy bubble

China, India are responsible?

Let's first look at the food. Is the rise in food prices caused by the decline in world food production? Not at all! According to the prediction of authoritative economic institutions, global food production has continued to grow for several years. It is estimated that this year's grain output will reach a record high, China also No exception. This is strange. Why has the grain increased in production year after year, but the world has suffered a food crisis?

The whole world is looking for criminals to create food crises. Some developed countries have targeted China and India. It is precisely because of the economic development of these developing countries that people's living standards have increased and food consumption has increased substantially, making the world's food consumption more than supply, resulting in a world food shortage.

This view sounds reasonable. China and India have a large population base, which together account for one-third of the world's population. In recent years, the economies of the two countries have taken off, people's lives have indeed improved, and food consumption has been correspondingly obtained. Improved. However, how much influence does the increase in food consumption in the two countries have on the world?

Take China as an example. China is both an importer of food and a grain exporter. The main food imports are wheat, barley, and high-quality edible rice. The main food exports are corn, rice, millet and sorghum. In 2003 and 2004, China's grain was still a net export situation. Although there has been a net import of Chinese food since then, the total amount of net imports per year is only a million tons. Compared with the level of world grain output of several billion tons, it is really a slap in the face, and China’s impact on world food prices. At most, it can only be an occasional wave, and there is no such thing as a storm. The situation in India is similar to that in China. It must be said that the food consumption in China and India has caused the world food price to rise exponentially, which is obviously not established.

If developing countries are not the chief culprit in the food crisis, who is the real criminal?


Goreig is a farmer in Minnesota, USA. He raises 37,000 pigs and consumes a lot of corn feed every day. But the price of corn has risen sharply in recent years, making farmers like him miserable.

Has the production of corn in the United States been reduced? No, the US corn production has increased year after year in recent years. So, as the world's largest corn producer, why is the price of corn in the United States soaring? Originally, this was caused by the production of biofuels. The so-called biofuels are fuels that are processed into ethanol (commonly known as "alcohol") to replace the gasoline and diesel used in current automobiles.

Corn is the main raw material for the production of ethanol fuel. In 2005, corn used in the United States to produce ethanol gasoline accounted for 12% of the US production. In 2007, this data reached 22%. By 2008, it is estimated that this ratio will reach 50%. In 2007, US corn production was about 144 million tons, of which 32 million tons were used to produce ethanol gasoline. If by 2008, 50% of corn was used to produce ethanol gasoline, at least 70 million tons of corn would be used. This data is much larger than China and India's net food imports, which is enough to cause the international food market to stir up.

In the past, US corn exports accounted for 70% of the world's total corn exports. Today, the United States even tries to import corn from other countries. It can be said that the sharp changes in the US food import and export situation are an important reason for the emergence of the world food crisis.

And not only is the United States using ethanol to make ethanol fuel, but the EU, Japan, and even some developing countries have joined the campaign to make ethanol from grain. The EU requires member states to legislate to reach 25% by 2030; according to Japan's plan, the country plans to convert 40% of domestic cars to ethanol fuel in the next few years...

So many countries have launched biofuel projects, and a large part of the food produced by farmers has been sent to the factory, and the world food crisis has arisen. However, according to the principle of supply and demand in economics, food demand is large, food prices are rising, farmers will receive more income, they will expand production, so more food will be produced, alleviating the food crisis. On the other hand, once biofuels are put on the market, they will play a role in replacing oil, so the oil market will be hit and the price of oil will fall.

This scene is very good for the world economy, but the real phenomenon is that oil prices are still high. Although biofuel projects have sprung up everywhere in the world, oil prices are still in their own hands, standing in the clouds. In the end, is the price of oil not controlled by economic “gravity” or is there a problem with biofuels?

Is a bubble of subsidy

Not long ago, the US Department of Agriculture conducted an in-depth analysis of the emerging biofuel market, and the results were ridiculous.

The burning value of ethanol is only 2/3 of that of gasoline. From the perspective of energy output, 1.5 gallons of ethanol in the fuel tank is equivalent to only one gallon of gasoline. The production of bioethanol requires a variety of energy inputs such as fertilization, harvesting, transportation, and grain processing. After deducting these previous energy inputs, the net earned energy of the balance is less than half of the above value. If you consider all inputs from production to sales, the energy needed to produce ethanol is even more than the energy obtained from ethanol. In a word, the production of ethanol is actually a waste of energy.

Moreover, the extraction of ethanol fuel from cereals is very low, meeting the world's energy needs. The United States is a global food producing country with 73 million hectares of grain-growing land, producing 350 gallons of ethanol per hectare. If all grains are used to produce ethanol fuel, it will be equivalent to 6.3 billion gallons of gasoline.

It sounds like a big number, but look at one piece of data: the United States needs to consume 170 billion gallons of gasoline and diesel fuel a year, so the total grain production is only enough to supply 3.7% of the fuel needed for transportation! Even the entire US 3 Millions of hectares of agricultural land are planted with grain, producing ethanol fuel, and can only produce fuel equivalent to 15% of current US gasoline and diesel fuel consumption.

The US Department of Agriculture survey clearly tells us that in order to produce such a bit of biofuels, we have paid the price of soaring world food prices, but the impact on oil prices is negligible. This is why biofuel projects are in full swing and oil prices are still soaring. Biofuels, just sounds beautiful, really experience, tastes bitter.

Since biofuels are a loss-making business, why are there so many projects launched? The answer is: government subsidies. In the past few years, world food prices have been at a low level, and countries are suffering from selling food. So some people think, why not convert the surplus food into oil? It not only solves the problem of food backlog but also solves the energy problem. However, the biofuel project launched has suffered losses. In order to “support emerging industries”, governments have come up with financial funds to support biofuel projects, so that the production of biofuels will no longer lose money. These biofuel companies have also helped to cover up the truth. Continue to lie to government subsidies. As a result, world food prices have soared, the cost of producing biofuels has also risen, oil prices have not been suppressed, production costs have risen again, and biofuels have fallen into the trap of losing money, relying on government subsidies.

The new technology energy bubble for biofuels has not yet been shattered. Although it is costly, many countries are still dreaming of turning food into oil. This dream must wake up, otherwise the world will pay a heavier price.

1 Type: Hot-rolled Steel Pipe 

2 Standard:  ASTM A1045 , ASTM A53,GB/T8162-2008,GB/T8163-2008

                       STPG42 JIS G3454, DIN1626

                        JIS G3456/3461, DIN17175, DIN1629

3 Material: Carbon45, ASTM 1045

4 Outer Diameter: 5mm-325mm

5 Wall Thickness: 4-50mm Length: randomly(6-12m) or according to the requirements

6 Applied for: liquid service, mechanical structure, oil industry, transportation and construction

7 Technique: Hot-rolled  Seamless

8 Place of Origin: Liaocheng, Shandong, China

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