Could we see $1.50 gas

[hurleyjd]

At what point will the refineries start curtailing production. What will happen with all of the jet fuel that occurs from each barrel of oil. The airlines will not be flying as much as they once were. Cannot make just one fuel from oil. I am sure Caustic can explain this when the tanks get full of fuel with no market for it.

 

[ga.prime]

Watch them. We all know if ethanol went away the oil industry wouldn't cry over it.
Even if they can't break ethanol, they sure will take the opportunity to put the screws to it.

Ethanol defined as "renewable energy" is required as a gasoline component (now at 10 % and set to go to 15%) by federal mandate and is not governed by the vagaries of economics.

 

[SBMF 2015]

Watch them. We all know if ethanol went away the oil industry wouldn't cry over it.
Even if they can't break ethanol, they sure will take the opportunity to put the screws to it.

Ethanol defined as "renewable energy" is required as a gasoline component (now at 10 % and set to go to 15%) by federal mandate and is not governed by the vagaries of economics.

Farming is the only business that is willing to produce a product under the cost of production for an extended period of time.
Yes they are mandated to blend, but why does the average consumer buy E10? Simple, it's cheaper than premium.
Consumers will buy the cheapest product available. If the refiners are not moving blended product then they have no reason to pay a higher price for something they dislike any way.
We have two ethanol plants within 30 miles of my house. I would wager that if crude stays cheap they will both go on "maintenance shutdown" for the summer .

 

[Stocker Steve]

They are estimating a 6 to 10% reduction in oil demand, so there will be less blending, and thus less corn used.

Anyone reducing thier crop acres 10%?

 

[SBMF 2015]

They are estimating a 6 to 10% reduction in oil demand, so there will be less blending, and thus less corn used.

Anyone reducing their crop acres 10%?

I hate to say I'm thinking of increasing corn acres. Soy beans are way under the cost of production. I'm debating on switching acres to 2nd year corn. At least I can chop corn or combine it and feed cattle.

 

[Stocker Steve]

Could be a big year for revenue crop insurance... I don't think corn is good for you, so I just ordered some pearl millet seed.

 

[1982vett]

They are estimating a 6 to 10% reduction in oil demand, so there will be less blending, and thus less corn used.

Anyone reducing thier crop acres 10%?

Well, not in the way your talking....but I've put together a list of cows to get rid of which amounts to more than 10%. Making that cut reduces the need to use other agriculture components. Will also cut down on equipment hours and labor too.

 

[Stocker Steve]

So we need less gasoline and less milk and less hamburger. Where does the downward spiral end?

If it gets cheap enough I think the Chinese will buy for their stock piles. Ironic.

 

[SBMF 2015]

Nobody ever said the Chinese weren't shrewd business men. Even though we are going to be on the short end of the stick. China is going to be able to fulfill there commitment to the trade agreement and do it at a very good price for them.