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Buzzword: Ethanol effect

Marketplace Staff May 25, 2007
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Buzzword: Ethanol effect

Marketplace Staff May 25, 2007
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A problem with the solution to a problem brings us this week’s Marketplace Money buzzword: ethanol effect.

The biofuel ethanol seems like a great idea, right? ‘Cause it’s made from good old-fashioned American corn. But guess what happens when you start making more ethanol? The cost of corn goes up, and everything that’s made with corn – from corn-fed beef to Grandma’s corncob pipe. That’s the ethanol effect.

A recent University of Iowa study says the ethanol effect pushed up food prices by $14 billion last year. It could soon swell to $20 billion. See, it’s not easy being green.

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