Posted by: Dirk | January 30, 2007

Etanoinflación

Paul Krugman (01-29) comments on the State of the Union:

The only real substance was Mr. Bush’s call for a huge increase in the supply of ‘alternative fuels.’ Mainly that means using ethanol to replace gasoline. Unfortunately, that’s a really bad idea.

There is a place for ethanol in the world’s energy future – but that place is in the tropics. Brazil has managed to replace a lot of its gasoline consumption with ethanol. But Brazil’s ethanol comes from sugar cane.

In the United States, ethanol comes overwhelmingly from corn, a much less suitable raw material. In fact, corn is such a poor source of ethanol that researchers at the University of Minnesota estimate that converting the entire U.S. corn crop – the sum of all our ears – into ethanol would replace only 12 percent of our gasoline consumption.

This is bad news for Mexico. El Pais (24th January 2007) writes:

Este grano es elemento básico de la dieta de mexicanos, centroamericanos y buena parte de los pueblos de América Latina. Julia compra estos días el kilo de tortillas a 10 pesos (unos 70 céntimos de euro), tres más del precio habitual, un aumento disparatado para una economía modesta. Los pobres llevan la peor parte de la subida del precio del maíz en México, que el Gobierno de Felipe Calderón se esfuerza por atajar.

The price for tortillas, basic ingredient of Mexicans’ diet, has already increased from 7 to 10 pesos. While the use of ethanol cannot solve America’s energy problems (Paul Krugman suggests curbing consumption as a better idea), it creates problems for Mexico’s poor. Relations between the U.S. and Mexico are already a little tense since the Mexican-U.S. border issue last year. The U.S. are stepping on its Latin American neighbors toes once more.

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