I think you need to parse that last paragraph a bit more. Here's what I can make of what you wrote:

demand for corn to make ethanol will double to 34% of total corn production (presumably is was 17% in 2007); overall corn supply will grow 11%; we don't know what's happening to non-ethanol demand for corn, but if stays constant, the shortfall will be 6% which sounds a bit less dramatic

You beat me to it.

This is the sort of thing that drives statisticians crazy when they read the paper. Numbers are almost always incomplete or badly presented or both.

If 4 Billions bushels of corn = 34%

Current usage is 2 Billion =

Total should be 12 B bushels.

It depends on whether the 12 Billion includes the 11% growth or not - I would assume that since the relative numbers are included, it does.

So current production should be about 10.6 Billion bushels - and 2 Billion is short of 18.8% of production.

So the increase, as a percentage of the total production, is 15% - certainly enough for a substantial impact over a 2 year period.

Because they could not pass math class.

Sorry, had to be said.

My wife was recently diagnosed with adult onset diabeties. That's led to a reapraisal of the sugar content in just about everything. Do you know how much high fructose corn syrup is in just about every prepackaged food we eat? No wonder so many people in the US are fat. If every bushel grown in the US gets feremented into ethanol and the brewers grain left over fed to chickens and hogs we could all eat more and better meat and still be healthier. Go ethanol.

That ethanol has little impact on corn and food prices. Factors such as global economic growth, weather problems and the weak dollar have increased demand for US commodities, as have higher energy prices over all (oil, gasoline, nat gas, diesel), which lead to higher processing and transportation prices. (EIA estimates gasoline prices would be 50 cents/gallon higher without ethanol blended in)

At the risk of sounded too much like an industry shill, I'll just point to recent testimony by federal officials at a Senate energy committee hearing.

"In 2007, the expansion in ethanol and biodiesel production is estimated to have increased the CPI for all food by 0.10-0.15 percentage point. During the first four months of 2008, the all food CPI increased by 4.8 percent, with increased ethanol and biodiesel production in the U.S. accounting for about 0.20-0.25 percentage point of the increase in retail food prices" - Joseph Glauber, Chief Economist USDA.

As the Reuters piece points out, a problem for the ethanol industry is that there are so many small producers, who aren't as efficient. Those are the ones that are going under.

Now there will be a point at which there are physical and economic limits on how much corn can be diverted to ethanol. That's why last year's energy bill, which ramped up the renewable fuels standard, starts phasing in non corn ethanol next year. Hopefully that will start taking some pressure off corn.

If ever we needed a real-life definition of the term Catch-22, here it is: Federal ethanol mandates have contributed to record corn prices which in turn make it almost impossible to turn a profit selling ethanol.

I don't see what is so interesting about this dynamic -- it is exactly what we should expect from a functioning market. High profits should attract more producers, which should in turn raise costs or lower revenues and bring this industry's profits back in line with the profits of other industries.

The rising price of ethanol inputs (i.e. corn) only reflect the simple fact that there are limited resources in the world for corn production.

I was developing ethanol distillation using low-temp geothermal energy in the early 1980s. Would have been a great financial success if my investors hadn't bailed, but only because of subsidies. It was obvious even then that using food for fuel was a stupid idea. However, non-food based (and especially non-agricultural) alcohols seem to me to be particularly wise (which is, I suspect, why we here so little about them, especially from government). I'm most curious about coal-based methanol (it was working pretty well for the Germans in WWII before we wiped out their production plants).

However, I believe that, given the opportunity, a reasonably regulated (as opposed to corporately controlled) marketplace could pick the winner. To this end, I'm intrigued by Dr. Robert Zurbin's (author of Energy Victory) idea of encouraging flex-fuel vehicles that allow consumers to vary their fuel choices to reflect competing fuel-type prices. (OK he says mandate. I prefer encourage, say by providing tax rebates to consumers who buy flex-fuel cars.)

Right here in the beginning of your essay "Federal ethanol mandates have contributed to record corn prices, which in turn make it almost impossible to turn a profit selling ethanol."

The operative words being "federal" and "mandate". Anyone who sees these two words in proximity to one another and thinks that equates to "surely it must be a good idea" should reconsider and take a time out to read a few books on how good governance comes about.

Since this BioFuels thingy is Voodoo anyway, you can assert whatever you want. Charles Lutwidge Dodgson wrote all sorts of nonsense and will be remembered lovingly forever. If these Industry people could just think of a good pen name they would be set. Alas, Corn Dog is not available (or advisable) and Soy Boy just doesn't get it.

They wouldn't have lasted 5 minutes in the Macro Econ class I took.

Now, do I fill my fuel tank or eat dinner tonight?

Starve in the freezing cold than use more drop of oil.

Sounds like sheer fucking brilliance to me.

In normal times, the current level of ethanol production would probably be profitable given the renewable fuel mandate. The disastrous weather in the midwest is a much bigger culprit here than demand-side increases.

And can we once and for all stop with the meme that "converting food products into fuel" is an inherent problem? Field corn is barely food anyway, at least for humans - aside from ethanol the majority is fed to animals, and another sizeable portion is heavily processed until it's become a nutritionless source of empty calories edible by humans.