Bacon: The Crisis We Should Be Panicking About

That damn ethanol subsidy. Bacon prices to soar! Forget the women and children, what will become of breakfast?

FROM: CNBC

The global debt crisis has sparked riots in Greece and elsewhere in Europe, but while you were watching the mayhem on TV, you might not have noticed that there’s a riot brewing at your kitchen table.

Bacon prices are expected to soar this summer — just in time for peak BLT (bacon lettuce and tomato sandwich) season. BLT season goes into full swing in July across much of the country as tomatoes start to ripen and, if you’re like Jason Perlow, who writes the “Off the Broiler” blog, by August, BLT’s will have become “major meals” instead of just a quick lunch.

But this year, just as the U.S. is worrying about its own debt crisis and a possible "double-dip" recession, the price of bacon —that sizzling, smoky comfort food we most need during tough times — is expected to surge. 

The price of pork bellies, which is where bacon comes from, jumped to more than $130 per hundredweight (100 pounds), and some analysts suggest it’s going to top last August’s level of $150.

“It’s going to be pretty tragic when you have your fresh ripe tomatoes and can’t have bacon for your BLT,” said Jason Mosley, author of the Mr. Bacon Pants blog and co-star of the “Bacon Live” podcast.

The reason for surging bacon prices is that hog farmers have pared their herds due to high feed costs after corn prices hit a record near $8 a bushel last month. Retail bacon prices hit $4.77 a pound in May, according to the Labor Department, and Rich Nelson, director of research at Allendale, told Reuters that it could reach near $6 a pound in the next few months.

The bacon community is outraged.

“Everyone is kind of freaking out about it,” Mosley said, adding that some bacon lovers have already reported seeing bacon prices above $6 a pound — and that's for the generic, store-brand “cheap stuff.”

Still, bacon lovers aren’t to be deterred.

“I think they’ll make cutbacks other places — stop buying other things so they can afford bacon,” Mosley said. He personally said he’s willing to cut back on some fresh fruits and vegetables — things like bananas.

“Get some good tomatoes and lettuce and forget the other stuff,” he said.

Some bacon mavens suggest it’s time to stock up for the coming crisis.

“Bacon lovers should take this as a warning that it’s time to head to the store and stock up. Tomatoes are beginning to ripen and prime BLT season is just around the corner,” said Heather Lauer, author of the book “Bacon: A Love Story” and the Bacon Unwrapped blog. “ As hog farmers do what is necessary to survive in challenging economic times, bacon consumers need to protect themselves as well,” she said.

Mosley also suggests using Bacon Salt to hold you over — it's a salt that adds bacon flavor to anything you sprinkle it on, though it isn't made of actual bacon.

As if the nation isn’t suffering enough, with high unemployment and gas prices still more than $3.50 a gallon, now we’re faced with a bacon crisis and the need to stockpile bacon.

America, it’s time to take this seriously. BLT season is fast approaching and we need to get this crisis under control.

With all the money the government has thrown at Wall Street and foreign countries that have spent themselves into crisis, it’s high time officials took this bacon crisis seriously.

Imagine a U.S. stockpile of oh, say, 700 or so million barrels of bacon that can be unleashed to the Walmarts [WMT 53.87 -0.21 (-0.39%) ] and Whole Foods [WFM 64.66 0.30 (+0.47%) ] of America when the nation is in time of need.

The Difference Engine: The beef about corn

From: The Economist

IN A surprise U-turn, members of the United States Senate voted 73-27 last week to abolish a 45-cents-a-gallon subsidy for ethanol from corn (ie, maize) that is used for blending with petrol. They also voted to kill the 54-cents-a-gallon import duty on ethanol from abroad. This is the first time in over three decades that the Senate has challenged the sacrosanct $6 billion-a-year tax break for American corn-growers and ethanol producers.

The federal government started subsidising corn-based ethanol back in the late 1970s—in a bid to wean the country off imported oil. As recently as last December, lawmakers voted to extend the ethanol subsidy for yet another year. Since then, two things have happened to make the politicians change their minds.

First, a broad consensus has now thrown its weight behind the environmentalists’ view that using home-grown ethanol—as a replacement for imported oil—squanders far too much energy and water in the process, and is not a particularly good way or reducing greenhouse gases anyway. Indeed, given the intensive use of energy in agribusiness, it is debatable whether replacing petrol with ethanol breaks even in terms of the “wells-to-wheels” energy consumed, or even produces a net reduction in carbon emission.
Besides, even if America’s entire corn crop were to be devoted to ethanol production, it would still only supply 4% of the country’s oil consumption. So much for the argument that home-grown ethanol offers an answer to America’s dependence on foreign oil.

Second, the food industry has gone noisily public about the way the federal government’s corn subsidies—which have encouraged American farmers to devote more and more of their corn crops to ethanol production—have driven up food prices. Last year, 40% of the corn grown in the United States (some five billion bushels) was used for making ethanol. This summer, corn supplies for animal feed are heading for a 15-year low. As a consequence, corn futures have soared to almost $8 a bushel—twice their price a year ago. Consumers counting the cost at the supermarket checkout now know who to blame.

In America, two ethanol-blends of fuel have been approved for use. The most common by far is E10, a blend of petrol containing up to 10% ethanol. In this case, the ethanol is used simply as an oxygenate (ie, an oxygen-rich additive) to reduce the carbon monoxide produced during combustion and to raise the octane rating of the fuel enough to protect the engine from “knocking” under load—a condition caused by the air-fuel mixture in the cylinders exploding prematurely instead of burning smoothly. Previously, MTBE (methyl tertiary-butyl ether) was the oxygenate of choice, but fell out of favour in 2004 when it was found to contaminate ground water.

Romney in Iowa: "I Support the Subsidy of Ethanol"

One more reason to be annoyed with Mitt Romney. Tim Pawlenty came out against ethanol subsidies which is the right position, but old Mitt Romney seeing an opportunity to exploit Iowa votes takes the opposite position. Nothing new.

From: Real Clear Politics

On his first trip back to the nation's first voting state as a soon-to-be declared presidential candidate, former Massachusetts Gov. Mitt Romney reaffirmed his support for federal ethanol subsidies -- an always important campaign issue in Iowa that figures to take on an even more central role in the divided GOP field.

"I support the subsidy of ethanol," Romney told a potential voter after an event here was cut short by a fire alarm. "I believe ethanol is an important part of our energy solution in this country."

Support for ethanol subsidies has long been considered a political necessity for candidates who want to succeed in the Iowa caucuses, but former Minnesota Gov. Tim Pawlenty tested that maxim on Monday during his official campaign announcement here.

"The truth about federal energy subsidies, including federal subsidies for ethanol, is that they have to be phased out," Pawlenty said. "We need to do it gradually. We need to do it fairly. But we need to do it."

Pawlenty was widely praised in fiscally conservative circles for taking a stance against the subsidies, which cost taxpayers about $5 billion in 2010, while former House Speaker Newt Gingrich has been singled out for criticism by influential conservative media outlets, including the Wall Street Journal editorial board, for his vocal support of subsidized ethanol.

Romney supported ethanol subsidies during his unsuccessful 2008 presidential run, in which he largely banked on winning the Iowa caucuses but finished a disappointing second to former Arkansas Gov. Mike Huckabee.

In the first two of his three scheduled Iowa appearances on Friday, Romney was peppered with questions about his commitment to the 2012 caucuses and was asked more than once why he's chosen New Hampshire, rather than the Hawkeye State, as the venue where he will officially announce his candidacy on Thursday.

Senator Coburn Plan to End Ethanol Credit

From: Bloomberg

Senator Tom Coburn is trying to challenge the proposition that all tax breaks are created equal.

The effort by the Oklahoma Republican to end a tax credit for ethanol places him in conflict with farm-state senators who want to keep the tax incentive. It also puts him at odds with tax-cut advocates in the Republican Party, who argue that eliminating the tax break would result in an unacceptable tax increase. The proposal could reach the Senate floor this week.

A vote would force many Republicans to choose between their no-tax-increase pledge and their desire to reduce the budget deficit by cutting what they view as waste. Coburn’s amendment reaches beyond the ethanol debate and draws attention to tax expenditures, which reduce federal revenue by more than $1 trillion a year. They range from the mortgage interest deduction to tax credits for security cameras in fertilizer warehouses.

American Thinker: The Energy Myth That Won't Die

From :American Thinker

The renewed prospect of $4.00 or even $5.00 per gallon gasoline has brought greater urgency, if not clarity, to a debate about national energy policy.

Predictably, the response of liberal energy navel-gazers has been off the mark. According to this group, the answer to the liquid motor fuel supply problem is...more ethanol.

Ethanol remains a case study in poor choices and the negative effects of government intervention in markets. The problems with alcohol-based "renewable" fuels are well-documented. Both corn-based and cellulosic ethanol have significant drawbacks, not the least of which is that artificial demand for corn to produce ethanol is driving up global food prices and contributing to civil unrest in parts of the world.

Using carbohydrates to replace hydrocarbons is not nearly as simple as the words politicians use to promote the practice, and the outcomes from converting carbohydrates to fuel are not as benign as they would have us believe.

Not only is the EPA prepared to authorize an increase in the domestic ethanol mandate from 10 percent to 15 percent, there is pressure to authorize importation of foreign-sourced ethanol.

A several-year-old ethanol scheme has recently attracted more interest - a demand to open American energy markets to Brazilian biofuel. Some call the Brazilian product "the good ethanol."

If we're smart, we'll kill this monstrous idea - and quickly.

Brazil, the world's largest producer of sugar, uses much of its sugar to produce ethanol, a process which bypasses the prior distillation of corn to sugar. American advocates of importing Brazilian ethanol ignore two inconvenient facts: Not only does Brazilian cane ethanol have the same problems as corn ethanol, Brazil has proven that, even by removing a step in the manufacturing process, ethanol is not a competitive fuel.

Brazilian ethanol has been a nightmare of impracticality. Production began in the 1970's as a response to the Arab oil embargo and to use only surplus sugar. Over the years, the Brazilian ethanol program morphed into a national energy policy. In order to "support" their expanding ethanol market and to make up for ethanol's fuel efficiency deficit, Brazil mandated flex-fuel vehicles and taxed ethanol at a rate less than gasoline (America taxes ethanol motor fuel content at the same rate as gasoline). Early on, Brazil mandated a 20-percent ethanol fuel mix for gasoline. Today, many vehicles in Brazil use mostly or only ethanol fuel. Brazil also nationalized their oil industry and generously and expensively subsidized ethanol production.

Surely, such massive government intervention in at least two markets would be sufficient to insure the success of ethanol.

It wasn't.

Since their ethanol program was conceived and implemented, Brazil has begun to aggressively develop newly-discovered offshore petroleum reserves. Petroleum development would be unnecessary if the Brazilian ethanol experiment had been successful. Environmentalists should note that the new Brazilian petroleum operations lie offshore some of the world's most pristine beaches.

The Brazilian experience with sugar-based ethanol has proven that alcohol fuels can't compete effectively in markets fixed to favor them, much less in open markets.

The socialization of ethanol in America and Brazil has encouraged large agricultural interests to acquire smaller farms and erode the family farm tradition in both countries. Other unintended consequences of both American and Brazilian ethanol policies are priceless -- as in unaffordable: The United States is the world's largest producer of ethanol from corn; Brazil is the world's largest producer of sugar cane ethanol. The world prices for both corn and sugar are currently at or near historically high levels, demonstrating the effects of artificial ethanol demand complicated by the vagaries of supply. The petroleum market works in the same way, except that the demand for petroleum, a single-use commodity, is practical, as is the development of untapped reserves by private investment.

The hypocrisy of elected officials on energy policy is staggering. Politicians demand more ethanol while preventing domestic petroleum exploration and production.

The price of oil recently exceeded $104 per barrel before retreating. It may go higher in the future, yet alternative energy advocates continue to tell us that we need not find and consume far more American gas, oil and coal. By denying practical supply sources, progressive energy policies play into the hands of some of the world's worst and least stable petroleum-producing countries.

At the same time, progressives denounce NAFTA and open trade with Mexico and Canada, our largest and best non-domestic sources of natural gas and oil.

Most American consumers favor free energy markets. They understand that, without overly-oppressive regulation and political obstacles to conventional sources of energy, free-market private investors and technological innovators accessing American energy resources can solve America's fuel-scarcity problems as well as associated environmental concerns.

Nevertheless, politicians prefer tinkering in energy distractions that are largely relevant only in the problems they create and the campaign donations they produce. If wind, solar, biofuels, wave power and other alternatives to hydrocarbon-based sources were economically viable and competitive in energy markets, all would be made available by "greedy" private investors without government subsidy. It is only government-enforced taxpayer investment in these alternatives that attracts private money interests. The real greed lies, mutually, in private "investors" chasing public funds for private profit with the complicity of politicians. Politicians promote energy alternatives and then harvest campaign cash from the recipients of taxpayer handouts. It's an insiders' game, a closed loop: politicians and rent-seekers are playing taxpayers and consumers for chumps on marginally viable and impractical alternative energy sources.

Any rational American energy policy must begin with carbon-based energy.

Our dependence on oil is one of necessity. The world's energy demands are simply too great for energy alternatives to provide much offset.

If the world is to move away from petroleum, radically new energy technologies must be developed. In the meantime, the most potentially successful solutions to lowering liquid fuel costs are the things progressives and many politicians oppose: increased exploration and responsible exploitation of our own fossil fuel-based energy resources offshore, in ANWR, in the Bakken Layer, in Marcellus Shale deposits and elsewhere in and around America.

The truth is that the best way to lower energy -- and, as a byproduct, food -- costs and to increase energy availability is to increase the supply of conventional, practical, domestic energy assets.