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Congress has to decide whether or not to renew the current $7.7 billion corn-ethanol subsidy by the end of the year. On the one hand, it seems madness to prolong a fuel industry that – at best – can only generate a bit more energy than it consumes (and more often less), that takes cropland out of food and feed production and, as result, raises the prices and lowers the availability of food. A 2007 Department of Agriculture report clearly outlined the effects of subsidizing corn ethanol: a steady decrease in food production, concurrent decreases in agricultural exports and rising costs of food products.
As distasteful as it may be to bite the bullet and end corn-ethanol subsidies, the alternative may be even more unpalatable to Congress. Demanding that the corn-ethanol industry stand on its own two feet would result in the closure of dozens of plants, the loss of thousands of jobs, writing off billions of dollars of losses and finding new sources of petroleum to replace the billions of gallons of ethanol that Americans put in their gas tanks each year. Both options are painful, and while a free market advocate like me would advocate cutting our losses, learning a painful lesson and moving beyond ethanol, Congress may not be so inclined. The benefits of ending the ethanol subsidy are long-term and market-driven. Few politicians are motivated to action by that big a picture, particularly when the short-term damage can be so devastating to their careers. How can even the most staunchly conservative farm-belt congressman face his constituents after voting to end ethanol subsidies? If and when subsidies end, farm income will drop, the property value of farms will plummet and thousands of workers employed in the ethanol industry will find themselves on the streets, looking for work in the worst economic climate since the Great Depression.
The fact that Al Gore has finally come to grips with corn-ethanol reality is a remarkable development, but his conversion has probably come far too late to be of any real value. The policies that he promoted throughout much of his political career have come home to roost and the economic damage that those policies have done is undeniable. Gore – more than anyone else – helped to create the renewable energy monster that saps our nation’s resources and undermines our prosperity today. Having profited handsomely from those efforts, the ex-vice president’s belated mea culpa has fallen incredibly flat.
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