Fuel Price Increase in US

0 Comment

The thrust at accomplishing set goals in pursuing the ‘green world’ philosophy and theory much based on the need to curtail the towering global climate upheavals has seen the emphasised shift in policy in various industry and agriculture fronts. The soaring fuel prices owing to the volatility of the oil prices have spurred government and energy as well as food industry stakeholders to consider alternative means of curtailing the predicament of escalating fuel prices. President George W. Bush has had the production of corn-based ethanol as part of the core of his energy policy. Hayashi Fumio (2007) notes, This has brought in some merits on board. The resonating perspective is based on that the emphasis on corn based ethanol production has acute implications on the success of the attempts at throwing a holistic approach to the whole global ‘green world’ initiative. The scholar further notes that the emphasis of green solution even to the fuel predicament has thus put America society back in the lead in the efforts of making the world a better place.
Despite the impact on the entirety of the national and international agriculture sectors the production of corn-based ethanol which has also been the part of the roo…
Hayashi, Fumio (2008) notes that, ‘This is a welcome policy reorientation given that this year alone over a million jobs were lost. The move will precipitate in the expansion of employment base for the American society. It is notable that the pressure from escalating fuel prices has necessitated the invention of feasible means of striking the balance between demand and consumption for fuel.
Fig. 1 Ethanol Production Projections
Source: national Agricultural Statistical Service
Fig 2 Corn Price Trends
Source: Shurson G.C. (2008)
It is evident from the two direct-relationship graphs that the growth of the ethanol production industry has a direct impact on the price of corn. What is particularly notable from the statistics is that during the 2002-2005 periods when 4 billon gallons of corn-based ethanol were produced the price of corn was peaking from below $2 a bushel to about $3. Although the price took a lunge in the 2004-2006 phases the rise afterwards has been significant with corn price escalating from just about $2 a bushel to over $5. This is the period when corn-based ethanol production capacity was at an average over 5 billion gallons. Statistical interferences drawn from the trends and patterns illustrated on the graph show that holding everything equal, the production of corn-based ethanol will hit phenomenal figures of over 11 billion gallons by the end of the 2009 which may propel the price of corn way over $9 a bushel. The growth of corn-based ethanol industry in tandem with demand in the US will lead to the expansion of the export GDP and thus help boost the strained US economy