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The Last Days of Ethanol?

Posted By Tait Trussell On April 26, 2011 @ 12:09 am In Daily Mailer,FrontPage | 27 Comments

A prosaic commodity—corn—is making strange political bedfellows. But their stance makes infinite sense.

They oppose heavily subsidized ethanol, made from corn. Opposition comes from such diverse advocacy groups as the Democrat-aligned activist organization MoveOn.org to the Tea Party-aligned FreedomWorks. Other opponents ranging across the ideological spectrum include the American Bankers Association, the Sierra Club and the libertarian Competitive Enterprise Institute.

They believe, as do sensible Americans, that using food for fuel is public policy insanity. The Environmental Protection Agency, keeping true to its usual irresponsible actions, decided earlier this year to allow the use of fuel containing ethanol in any gas-powered car or truck  An agency that is supposed to protect the environment looks the other way despite such environmental consequences as water pollution from heavy application of farm chemicals applied to corn fields to increase production, clearing of wildlife habitat, and plowing marginal and erodible lands to boost corn supply.

Ethanol was sold to the public as a way to reduce crude oil imports. Yet for our investment of $17 billion from 2005 to 2009, the reward to taxpayers was a paltry 1.1 mile-per-gallon increase in fuel economy. Simply keeping our tires properly inflated could have saved more than that.

Congress earlier this year voted to extend the current $7 billion ethanol subsidy for one year and the tariff on ethanol at the existing rate as part of the Bush tax rate compromise. Ethanol now eats up 35 million acres of corn, forcing farmers to convert wheat and soy acreage into corn.

There are more than 200 ethanol plants in two dozen states. Production, however, is centered in the Midwest. About 40 percent of U.S. corn grown is used to make ethanol.

We’re not only wasting taxpayer money on ethanol for domestic use, but also exports are surging, the Renewable Fuels Association reported April 18. If the current pace of exports continues all year, they could total more than 700 million gallons, compared to 400 million gallons in 2010.

As the rising cost of corn is increasing many grocery prices for Americans, the use of food as fuel is getting an even shadier reputation. Corn prices doubled in the six months between July 2010 and January 2011, said a story in Investor Uprising, a commodities publication.

The price of corn affects a host of products, from livestock feed to the syrup used in making sweet drinks and candy. When it costs more to feed livestock, the prices of meat and dairy products that come from animals that eat corn also climb. Our nation’s corn supply is at its lowest level in nearly four decades, according to the Agriculture Department.

The Grocery Manufacturers Association warned Congress April 13 of a food commodity crisis because 40 percent of the country’s corn production is being “diverted from food  and feed to produce 13 billion gallons of corn ethanol” to be blended into gasoline.

Americans, by 50 percent to 41 percent, believe the country should give priority to the development of energy supplies over the environment when these two goals are at odds, the Gallup Poll found in March. Apparently, citizens have been buffaloed by the Obama Administration into believing development of alternative energy sources are crucially important. The poll finds 66 percent of respondents saying they favor development of alternative energy, while 26 percent choose production of more oil, gas and coal.

Hewing to the administration line, Agriculture Secretary Tom Vilsack said in February the United States “can do it all.” That is, turn corn into ethanol without running short of food. “There’s no reason for us to take our foot off the gas,” he said, referring to biofuels. The department calculated a record five billion bushels of corn will be used to make ethanol in the marketing year opening Sept 1, up even more from last year. It also forecast that food prices will rise 3.5 percent, double the current core inflation rate.

Former President Clinton, meanwhile, added a note of caution at the outlook conference saying, “We don’t want to become energy independent at the cost of food riots.”

In President Obama’s energy speech March 30 he said, “In an economy that relies so heavily on oil, rising prices at the pump affect everybody.” He also claimed falsely that his administration has approved 39 new shallow-water permits as well as seven recent deepwater permits. ”So, any claim that my administration is responsible for gas prices because we’ve, quote unquote, shut down oil production—any claim like that is simply untrue.”

But the fact is, the seven deepwater permits issued over the past 12 months mostly were started by the Bush administration. Obama also claimed to be exploring new offshore areas in the Mid-and South Atlantic, which could soon be accessed. The only hitch is that his Department of Interior has excluded those areas from its 2012-17 lease plan.

As for ethanol made from corn, it soaks up two-thirds of all federal subsidies for what Washington calls “renewable” energy, including federal payouts for wind, solar, and geothermal. How long will this nation irresponsibly use food for fuel?

 


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