Economic sabotage

Ever since National came to power it has concentrated on making the economy stronger.

It is succeeding but more than a year away from the next election the spectre of a LabourGreen government is providing a hurricane force headwind.

The government has put a lot of effort into policies which encourage savings, investment and export-led growth and LabourGreen are sabotaging that.

The façade behind the Labour-Greens power plan is crumbling as it becomes clear their electricity nationalisation ‘plan’ is nothing more than deliberate economic sabotage for attempted political gain, Economic Development Minister Steven Joyce says.

“Comments made in recent days by Grant Robertson, David Parker, and Russel Norman show they don’t care about the damage to KiwiSaver accounts, mum and dad investors and the wider New Zealand economy,” Mr Joyce says.

“Financial analysts including JB Were, Woodward Partners, Milford Asset Management, First NZ Capital, Devon Funds Management and Forsyth Barr are unanimous in their condemnation. One has labelled it a ‘hand grenade’ to the New Zealand economy, while others have said it will cut the value of every New Zealanders’ KiwiSaver account and lead to rolling blackouts.

“Investment in new power generation would suffer as would wider investment in the New Zealand economy. The National-led Government is focused on attracting investment in new business and jobs for New Zealanders. Labour and the Greens would do the exact opposite.

“Kiwis are deeply suspicious about the Labour-Greens announcement and its timing. It’s simply economic sabotage.

“The great irony is that it’s clear the policy is not worth it for anybody. The last time that we had central planning of the power industry, prices went up faster. Labour’s own Cabinet paper in 2006 said it would push costs up.

“New Zealanders will see it for what it is: a cynical and selfish attempt by left-wing parties to play politics with the value of New Zealand’s economic assets.”

The market isn’t perfect but I’d rather put my faith in it than an army of expensive bureaucrats.

And I’d feel much happier investing in companies that weren’t going to be at risk from government interference.

Pills aren’t power

Macdoctor makes a welcome return to blogging with a post entitled power drugs which explains the differences between Pharmac and the LabourGreen plan for NZ Power.

Pills aren’t power.

Who’d want people who can’t understand the difference running the country?

 

Do they know what they’re doing?

One of the LabourGreen complaints about the sale of minority shares in a few state owned energy companies was that the country would lose out on the dividends.

Under the Mixed Ownership Model the government would still get at least 51% of the dividends and the tax on the rest.

Under the LabourGreen plan to set up a monopoly wholesale market they’re offering to forgo all dividends.

Another of the LabourGreen complaints about the sale of minority shares was that the company would be sold too cheaply and the buyers of shares would make money out of them.

Thanks to their preposterous plan it is likely the shares will sell for less than they otherwise would have and those who buy them will make even more money from them.

Do they know what they’re doing?

Four reasons powering back to socialist 70s won’t work

Tweets of the day:

1. Steven Joyce ‏@stevenljoyce 42m

   4.Polish shipyard approach discourages investment & jobs in NZ. Capital is mobile, Lab doesn’t understand, Greens don’t care #policyfail

   Expand

2. Steven Joyce ‏@stevenljoyce 59m

   3. Lab/Greens want ETS that would increase prices more than consumers would save, even if policy worked. #policyfail http://www.stevenjoyce.co.nz/index.php?/archives/190-Greens-Labour-would-cost-household-power-bills-and-jobs.html …

   Expand

3. Steven Joyce ‏@stevenljoyce 1h

   2. Labour has #policyfail form. Under them, power prices up 70%. National’s more than halved that. Well-regulated competition = lower prices

   Expand

4. Steven Joyce ‏@stevenljoyce 2h

   1. It won’t work. Intl examples show power shortages, taxpayer subsidies, dramatic price incr. Even Lab govt opposed it (2006) #policyfail

What will they be doing?

Question of the day:

Apropos of which is the quote of the day:

Power prices

I was the National Party’s electorate chair when Max Bradford introduced the power reforms.

It wasn’t an easy time to be a volunteer in the party – people inside and outside opposed the changes.

More than a decade later many still regard them as a mistake and blame them for steep increases in the price of power.

But as this graph from Kiwiblog shows, that is wrong.

Labour are saying that it was the Bradford reforms that led to increased prices. in fact the four years after the reforms saw the smallest increases in 25 years.

Also worth noting that of the increases in the last four years, two of them were due to external factors – the GST increase (which had compensating tax cuts) and the introduction of the Emissions Trading Scheme.

A variety of factors impact on the price of power.

The most obvious one this graph shows is Labour governments and the LabourGreen plan to nationalise wholesale power could well make that worse.

LabourGreens steal from us all

JB Were says the LabourGreen power plan will sap energy from the local market:

The Labour/Greens announcement on electricity sector reform concerns us on two fronts: firstly, the move to a state buyer of power risks being a retrograde step for the New Zealand economy. Secondly, we believe it will prove damaging for New Zealand capital markets, and comes at an unfortunate time given the significant progress made here since 2010. We detail these two concerns below: . . .

The damage to capital markets has already started.

Share prices in energy companies  fell yesterday in the wake of the LabourGreen plan to power us back to the socialist seventies.

TrustPower, which is 50.7 percent owned by Infratil, fell 5 percent to $7.18, leading decliners as fallout from the opposition parties’ plan to centralise buying of electricity and split generators from their retail arms weighed on utilities.

Contact Energy fell 2.8 percent to $5.31 and lines company Vector slid 2.1 percent to $2.82. Infratil dropped 1.3 percent to $2.30. . .

Those shares aren’t just owned by the wealthy the left hate.

They’re also owned by people of modest means who have worked hard and put something away for a rainy day.

They’re also owned by community trusts and other philanthropic organisations which fund charitable projects.

They’re also owned by insurance companies, including ACC.

They’re also owned by Kiwisaver and the Superannuation Fund.

The LabourGreen power plan is in sabotaging the value of investments is stealing from us all.

LabourGreen power plan will increase prices

The LabourGreen plan to power us back to the socialist seventies will increase the price of power - and at least one of their MPs knows it.

Electricity consumers should be under no illusion that the Labour-Greens power plan will hit them in the pocket, says Energy and Resources Minister Simon Bridges.

“Harking back to the 1970s with a half-baked nationalisation plan will ultimately cost consumers as it returns the country to the days of supply constraints, power blackouts and ultimately higher prices.

“David Parker himself said this in advice to the Cabinet in 2006.

“As Minister of Energy he said that “a single buyer would likely result in higher capital and operating costs”. He went on to say that: “The risks involved in changing arrangements could be significant. The resulting uncertainty could lead to investment proposals being put on hold. Direct implementation costs could be large.” And, he admitted that “The single buyer would be relatively poor at sustaining pressure on operational costs.”

“Competition is by far the best tool for delivering electricity at competitive prices,” says Mr Bridges.

“Our 2010 reforms mean that there is more competition amongst generators and retailers than under Labour. We are seeing more innovation and efficiency with 800,000 smart meters operating in New Zealand homes without any need for state intervention.

“Kiwi consumers have the power in their own hands. They are switching in their thousands for a better deal from suppliers and saving hundreds of dollars a year in the process.

“The Labour-Greens policies will actually result in higher prices over time because we’ve seen before that politicians and central bureaucracies do a bad job of setting prices and ensuring supply. Anyone who remembers the power blackouts of the past will know this.

“So does David Parker.”

The Cabinet papers are here.

Parker said publicly on more than one occasion that he stood for Labour because of Max Bradford’s power reforms.

He also said publicly that Labour hadn’t made any major changes to them because it couldn’t.

The Cabinet Papers back that up and show the LabourGreen plan won’t work.

 

Powering back to socialist 70s

BusinessNZ calls the Labour/Green plan to nationalise electricity wholesalers economic vandalism.

Chief Executive Phil O’Reilly says the proposal would destroy a functioning market and replace it with heavy-handed bureaucracy.

“Inserting an army of bureaucrats between power generators and retailers would destroy price signals, so prices would not reflect the cost of generation.

“In that situation, the taxpayer would continue to pay ever higher subsidies of the electricity system. This is not sustainable.

“The Electricity Authority said only yesterday that the electricity market is as competitive as it has ever been. It can always be improved, and this is where the focus should be.

“It’s only competition that can drive prices down. Governments can’t do this, not without subsidising the sector from taxes.

“A state-controlled sector as envisaged by Labour would drive out private investment. Why would the private sector invest in generators when the state can determine the prices they can charge, while subsidising state-owned competitors?

“The private sector power companies would have to seriously consider their future in the market. Those who have invested heavily would basically find their profits confiscated.

“Interfering in the market in this way would send a signal to the rest of the world that it is not safe to invest anywhere in New Zealand. The knock-on impact from that, on jobs and growth, would dwarf any short-term benefit from artificially reduced electricity prices,” Mr O’Reilly said.

Energy and Resources Minister Simon Bridges says the Labour-Greens power plan is incoherent and will kill competition in the electricity market.

“Under the previous Government, electricity prices increased by 72 per cent. It has taken the National-led Government’s reforms to arrest these ridiculously steep increases on New Zealand households,” says Mr Bridges.

“The 2010 electricity market restructure is working. The market now has more players and much more competition than it ever had under Labour.

“New Zealanders are increasingly taking advantage of greater competition and are switching companies for a better deal – in some cases, saving up to several hundred dollars a year.

Since the Electricity Authority’s What’s My Number? campaign began in May 2011, there have been almost 700,000 consumer switches.

“Why scrap the whole electricity market when consumers can already save more than the economically illiterate promises the Opposition is making?

“These types of policies have been considered in the past and rejected for very good reasons. Consumers should be very afraid of them. They may look simple but all they will ultimately bring is higher costs to households,” Mr Bridges says.

Economic Development Minister Steven Joyce calls it a a half-baked Soviet Union-style nationalisation “plan”:

“This is truly wacky and desperate stuff obviously made up in the last minute in the Koru Lounge between comrades Norman and Shearer,” Mr Joyce says.

“Their crazy idea to have both a single national purchaser of electricity and to exempt Government-owned companies from both company tax and dividends would effectively demolish private investment in the electricity industry overnight. It would also raise real questions as to why any individual or company would want to invest in businesses in New Zealand.

“Even the idea of it is economic vandalism of the highest order, with the timing designed to try and disrupt the mixed-ownership company floats. What we are seeing here is a desperate Opposition that is prepared to sacrifice economic development in New Zealand on the altar of political opportunism.

“The sad truth is that Labour has no idea how to operate a competitive market that keeps downward pressure on prices. Labour made a number of reforms to the electricity market in the early 2000s and the result was power prices rising 72 per cent over nine years.

“This Government’s reforms have halved price increases while maintaining investment in generation and transmission. Labour’s suggestion today is no more than a belated apology for their mismanagement, with a back-to-the-70s solution that would only make things worse.

“You seriously have to question the quality of economic advice the Labour Party is getting. They really need to get a lot more serious if they are ever to be considered fit to manage the New Zealand economy.”

It’s not just the government questioning the policy.

Colin Espiner asks has Labour actually gone insane? As in stark, raving, Monster Loony Party mad?

I’m assuming the answer is yes, judging by today’s incredulity-creating announcement that, if elected next year, Labour will essentially nationalise the electricity industry. . .

The Opposition says it’s going to create a single buyer, NZ Power, that will buy all the country’s electricity generation “at a fair price” and then onsell it to consumers. 

It’ll pretty much give away a 300KW bloc to every household and then charge for additional units. 

At a stroke, Labour is proposing to dismantle the electricity market, ruin Contact Energy and Mighty River Power and decimate the Government’s share float plans for both MRP and Meridian. 

Oh, and sell thousands of mum and dad investors down the Mighty River, since MRP’s share price would almost certainly plummet if the company was forced to retail only through a government department at whatever price it deemed to be fair. 

Already Contact shares dipped 3 per cent on the news, and that’s just a taste of what would come if this policy was ever implemented.

I’m no fan of high power prices – and I don’t own any Contact or MRP shares – but what Labour is proposing is essentially nationalisation a la Brazil or Argentina. This is Third World, funny-money stuff. Goodness knows what the financial markets will make of it. And what message does it send to overseas investors? . . .

It’s extremely rare that I agree completely with Economic Development Minister Steven Joyce, but his comment today that the plan was “a return to the 1970s-style monopoly provision of electricity…Only North Korea and Venezuela did not think such ideas are nuts” is pretty much spot on.

I agree with Joyce that Labour is virtually sabotaging the economy. 

It is, in my view, also an indication that Labour does not believe it has any hope of winning the next election. In my experience, only political parties that know they have no realistic hope of winning an election propose things they know they will never have to try to implement. . .

There is no virtually about the economic sabotage this policy would inflict.

I was in parliament for Question Time yesterday.

The Government benches were enjoying themselves and Ministers made the most of the opportunity Labour and the Green Party gifted them:

Hon STEVEN JOYCE: The Electricity Authority yesterday released its review of the electricity market in 2012. The report showed 18 percent of customers, around 32,000 people a month, voted with their feet by switching electricity providers in 2012, presumably for lower prices. For the benefit of the Opposition, that is called “competition”. Since November 2008 annual electricity price increases have halved from the 8 percent year-on-year increases suffered by hard-working New Zealanders during the previous 9 years. This follows a number of pro-competitive reforms by this Government, which apparently the Opposition is not aware of. We have reconfigured State owned enterprise assets to increase competition, created the Electricity Authority and made it responsible for promoting competition, allowed line businesses to compete in the retail space, and funded promotion of consumer switching through the What’s My Number campaign.

Todd McClay: Has the Minister seen any other proposals to try to lower electricity prices?

Hon STEVEN JOYCE: Well, weirdly, yes, I have. Just before lunch today I received one report, which I believe came from the “North Korean School of Economics”. Apparently, the suggestion there was that nationalising the entire electricity industry would somehow lead to lower power prices. . .

That got a point of order call from Winston Peters to which the Minister responded:

Hon STEVEN JOYCE: If I could perhaps clarify my answer, I should clarify that I received a report from the local branch of the “North Korean School of Economics”.

I’d like to believe Espiner’s theory that this is the policy of parties which know they’ll lose the next election and therefore never have to implement it.

The only other explanation is that the people promoting them are so economically illiterate they don’t understand what they’re talking about.

Either way, it shows they haven’t learned from history because these policies would power us back to the socialist seventies and it would be all downhill from there.

Labour’s desperate attempt at sabotage

Labour is making a last-ditch desperate attempt to sabotage the partial sale of Mighty River Power.

Shares in Mighty River Power go on sale today, but Labour is warning potential investors it plans to makes changes in the electricity sector if elected next year. . .

He won’t say what the changes will be, only that is was fair to warn potential investors.

“What we’re most concerned about is the rise in power prices and the fact that when these assets are sold the likelihood is that power prices are going to go up and that the companies are going to be increasingly held in foreign hands.” . .

The Labour leader is playing at being David Shearerpisos again.

There are no details on what they’d do because there is nothing they could do. If he’d asked his Finance Spokesman, David Parker, he’d know that.

Power prices went up far more steeply in the nine year’s when Labour was last in government than they have since National took over in 2008.

At a public meeting, when he was a Minister, Parker was asked about power prices and said he’d joined Labour because of Max Bradford’s electricity reforms.

In response to a question about why Labour had done nothing to reverse the changes or moderate them he said it was too late, there was nothing the government could do.

Shearer’s latest release is empty rhetoric. It displays the party’s contempt for, and ignorance of ,business and provides another reason to ensure they won’t be leading the government after next year’s election.

Southland’s loss NZ’s gain?

Invercargill City Council has resolved to take out full-page advertisements in all major New Zealand newspapers to get across what it calls the “correct information” about the deal Meridian Energy and the smelter’s owner, Rio Tinto, are trying to negotiate over power prices.

I’m pleased my rates won’t be paying for that.

The rest of New Zealand, or at least the newspaper reading segment of it, might have a great deal of sympathy for the plight of workers facing redundancy and the downstream impact on Invercargill and Southland.

But sympathy is very unlikely to translate into action and if it did, what action would that be?

When the price of aluminium was high it might have made sense to import bauxite, use our relatively cheap power to convert it into aluminium and export that. But the world price of aluminium has plummeted and Rio Tinto says the power isn’t cheap enough to keep it here.

Getting across the “correct information” isn’t going to change that.

The ads are going to be even less effective if those who read them also read that there’d be no trouble getting excess power to Auckland if the smelter closed.

The ICC would be better employed working out how to attract businesses to the south to help employ those who would lose jobs in the smelter closed.

That might also provide a use for at least some of the excess power so it wouldn’t need to be sent north.

Without that, the loss of the smelter in Southland could turn into the gain of a greater supply and therefore lower priced power for the rest of New Zealand.

The cost of renewable energy

Greenpeace doesn’t think its important to address the costs in its report on on renewable energy.

In answer to a question from Nikki Kaye on advice he’d received on the proposition of a 40 percent reduction in emissions by 2020 and whether a 100 percent renewable electricity supply would be achievable then-Minister for Climate Change Issues, Nick Smith, said:

. . . I am advised that that would require, first, the writing-off of $4.5 billion of thermal generation assets. It would also require $11 billion for the replacement capacity of 2,500 megawatts, and $2 billion for additional renewable peaking stations needed to ensure security of supply in a dry year. This amounts to a total capital cost of $17.5 billion, excluding the additional transmission investment that would be required, and this would amount to a 30 percent increase in the power price for all consumers. Going 100 percent renewable would also require the equivalent of another seven Clyde Dams to be built by 2020. I do not describe $17.5 billion, a 30 percent power price increase, and seven Clyde Dams as being easy.

New Zealand is blessed with plentiful supplies of water and already have a high proportion of hydro electricity.

But many of the people who want more renewable energy are also opposed to more hydro generation and it would be difficult to find anyone who thought a 30% increase in power charges for everyone was acceptable.

Fewer US cattle, more opportunities for NZ?

RadioNZ reports the US beef herd numbers are at an all time low:

Numbers peaked at 132 million head of cattle in 1975. At the start of this year this was down to just under 91 million.

Across the US, cattle are sometimes housed in feedlots to be fattened for slaughter. These huge operations on average contain around 3000 animals have also suffered a significant drop in numbers, down around 12.5% on last year.

So what is going on?

There are long term factors in terms of profitability and rising costs but what’s really pushing the decline right now is a potent mix of environmental issues and politics. . .

These factors have been compounded by drought. It will rain again one day, the impact of environmental and political issues will be harder to get over.

The US Environmental Protection Agency (EPA) has had a mandate in place since 2005 that requires a certain percentage of US liquid fuel comes from renewable sources.

In practice this means blending ethanol made from grain with regular gasoline. This year, as the drought persisted, desperate farmers asked the EPA to set the mandate aside to help cut corn prices.

They refused and this year ethanol production will consume a whopping 42% of the corn crop, says the US Department of Agriculture.

It is difficult to understand how fuel takes precedence over food in a hungry world.

Dr Stan Bevers from Texas A&M University say the US beef industry was built on abundant corn supplies, so the cattle industry must adjust and get smaller.”

According to Dr Derrell Peel, from the University of Oklahoma the current problems could have long term impacts on US beef. He thinks it is likely there will be changes in how cattle are fed. Less grain, more grass, and lighter cattle.

Housing animals or having them in feedlots makes it easier to deal with effluent but it is a very inefficient way of converting grass to protein.

The New Zealand free range grazing system is much more efficient and the decline in beef herds in the USA could provide opportunities for us.

Bradford vindicated?

The opposition to power reforms of the 1990s and their architect Max Bradford were a significant contributing factor to the loss of the seat of Otago for National’s Gavan Herlihy.

David Parker, who won the seat, told a pre-election meeting in 2002 that they were one of the factors which motivated him to stand for Labour.

But were they really so bad?

Kiwiblog has a graphic, originally from the ODT, which shows they did work as intended:

Regulation and re-regulation aren’t the only factors which affected prices.

The reliance on hydro generation puts pressure on supply and therefore price if there is a drought which reduces the water flow into the lakes behind dams.

But prices went down when retail competition was introduced and went up again when Labour re-regulated the electricity market.

 

Power price facts

Parties opposed to the partial sale of a few state-owned energy companies keep raising the fear of price rises when power companies are partially privatised.

Prime Minister John Key was able to counter that with some facts during Question Time yesterday:

.. . Secondly, we would like to remind the Leader of the Opposition that under Labour, power prices went up 72 percent; under National they have gone up 14 percent. I also refer the member to the Powerswitch website, which shows a couple of things. Firstly, of the 21 companies that are listed, the 14 cheapest are actually privately held companies, and the 15th is a council-owned company. The advice I have had is that from May 2011 to April 2012, 422,256 customers have changed electricity retailers, which shows that under a National Government there has been a great desire to see choice and efficiency in the market.

No-one is promising a price reduction when energy companies are partially privatised.

But if 15 of the 21 power companies now operating which offer the cheapest prices aren’t SOEs, partial sales should benefit consumers.

No more Clutha dams

The grapevine has been saying for several months that Contact Energy no longer wanted land along the Clutha River.

The logical conclusion from that was that the company was giving up its plans to build more dams on the river and that has been confirmed:

The energy company has spent the past three years investigating the options at four sites, Luggate, Beaumont, Queensberry and Tuapeka Mouth.

It says the costs were much higher than the expected $300 million to $1.5 billion per dam, meaning none of the options are viable in the foreseeable future. . .

Other factors contributing to the decision include the unease within communities living along the Clutha and the cost of transmission, including future upgrades of the Cook Strait cable.

The company has bought land along the river. This decision could mean there will be several farms for sale.

Plug pulled on Project Hayes

After six years of environmental hearings, Meridian Energy has pulled the plug on its Project Hayes wind farm on the Lammermoor Range.

Project Hayes was by far the country’s largest wind farm project when it was first announced, and envisaged a 633.3 Megawatt station with 176 turbines stretching across a plain that is both barren and ecologically important. 

Lovers of the sparsely populated area’s vast landscapes, including former All Black Anton Oliver and painter Grahame Sidney, were among chief opponents of the project, and were the reason the Environment Court turned down Meridian’s application in 2006.

The resource consents granted in 2007 were challenged in the Environment Court, which cancelled them, leading Meridian to appeal the cancellation in a process that had been ongoing until today.  . .

It appears Binns viewed Project Hayes as an expensive legacy issue, which was potentially unwinnable, and he said the economics of the project had become less attractive.

“Our portfolio has developed considerably and our review showed us that other projects now are a higher commercial priority than Project Hayes,” said Binns in a statement.

“Meridian now has a number of potential development options that would be progressed ahead of Project Hayes. Withdrawing the consent applications is not only the most prudent commercial decision for Meridian, but also avoids prolonging uncertainty about this project for the community and the project’s supporters.”

Total costs over the nearly six years the issue has been live amounted to $8.8 million, of which $7.2 million would be written off in the forthcoming annual accounts.

It was a very controversial project which attracted strong opposition but it also had strong support from some locals.

It has cost the company a lot of money and it was also expensive for those opposing it.

The project was started by then- CEO Keith Turner who was also behind Project Aqua, Meridian’s attempt at hydro development on the Lower Waitaki River. Investigations for that were estiamted to have cost the comapny about $95 million before it was canned, although that included purchases of land which were subsequently sold at a profit.

One of the arguments for partial privatisation is that it will impose more rigor on companies which are now 100% owned by the state.

I wonder if the company would have attempted to do this development had a minority shareholding been in private hands and whether that would make a difference in future?

Opposition nothing but nimbyism

I’d have a lot more respect for  people who don’t want any oil exploration near New Zealand if they didn’t use oil or its by-products.

Since they do the opposition appears to be nimbyism – they’re happy to use oil from somewhere else but greet the prospect of exploration here with a “not in my backyard”.

Gas returning to essential services including dairy processing

Hospitals and other essential services, including most dairy factories in the upper North Island, are getting gas supplies returned after the break in the Maui gas pipeline.

As coordinator of the gas emergency, Auckland-based network operator Vector said the company was working methodically to excavate at the site of the pipeline break, at a site north of New Plymouth, near White Cliffs.

The work was “methodical” and proceeding in 300 millimetre increments to ensure the safety of workers at the site, and to prevent any further damage to the pipe.

The cause of the weld break is unknown at this stage. Replacement pipe is already at the site, ready for installation once the pipe is exposed.

The return of supply to affected customers is unlikely to be immediate, as systems need to be repressurised where they have been bled of gas that was in the pipe before yesterday’s“curtailment” notice to all gas users other than households.

Fonterra warned yesterday it would have to dump about 30 million litres of milk a day at a cost of around $20m after the gas outage forced it to close 15 of its 17 factories.

This couldn’t happen at a worse time as most herds are at or near peak supply in a season of high production.

There is also concern about the environmental impact from dumping all that milk.

Attention now must focus on fixing the pipeline and restoring supplies.

When that’s done some questions need to be asked over security of supply, quality of infrastructure and the need for a Plan B when normal supply is interrupted.

Spot the link

Could there be a link between this:

Biofuels regain momentum:

Global biofuel production increased by 17 percent in 2010 to reach an all-time high of 105 billion liters.1 (See Figure 1.) The increase exceeded the 10 percent growth experienced in 2009, when production was at 90 billion liters.2 Biofuels provided 2.7 percent of all global fuel for road transportation—an increase from 2 percent in 2009.3

And this:

Price of breakfast soars:

The average cost of feeding a family breakfast is 11.7 per cent higher today   than it was one year ago, with the price of some staple items rising by over   40 per cent. Official figures last week put overall inflation in the UK at   4.4 per cent . . .  

The rising prices of basic commodities such as wheat, sugar, coffee and   vegetable oil – which form the basis of many breakfast foods – have been   blamed for the inflation-busting increases.

Tim Worstall thinks so. He says breakfast is getting more expensive and biofuels are to blame:

You’ll note that three of the four are items that are used to make biofuels. . .

The price of eggs is largely determined by the price of corn which is….yes,
another crop that is used to make biofuels. I think I’m right in saying that
some 40% of the entire American crop is currently turned into ethanol.

This is, quite sadly, simply evidence of the quite lunatic idea that we
should be putting food into cars rather than people. The idea itself is bad
enough but we then have the governmental insistence (on both sides of the
Atlantic, the US and the EU) that such fuels must be used. There is no choice in
the matter, we are not allowed to avoid starving people.

An increase in renewable fuels, particularly if they are cleaner burning, is a worthy aim but feeding people is more important than heating and moving them.

Crops for food should always take precedence over crops for fuel.