E85 fuel and asian demand blows milk prices out

One of the things that you learn in buisness school is that sometimes your great idea will have unintended consequences.   Last year, the US mandated that a certain additive in gasoline was to be replaced with ethanol.  Ethanol is made with corn in the US.   The theory was that corn was produced locally inside the US, and it would lower the demand for oil from overseas, etc.  In some states, they even run E85, which has significantly more ethanol in it.

Problem?  Well, the demand for corn to make fuel has increased the price of corn so much that now the price to feed cows has gone up, which in turn leads to more expensive milk.  Combine that with increased asian demand for milk, and you get a wild market flucuation that now has the price of a gallon of milk being higher than a gallon of gas… and the milk isn’t imported from the middle east!  Click here to read an interesting story on this weird situation.