Ethanol is a bio-fuel made primarily from corn.  Its production and use has been pushed by radical environmentalists and pandering politicians for years as a means of  reducing oil consumption, reducing air pollution and more recently reducing “global warming”.  In 1994, the Senate approved a measure mandating ethanol be added to gasoline by a vote of 51-50 with who else but Vice President Al Gore casting the deciding vote.  Opponents called the measure: “a gigantic flim flam to the American public”.  Supporters touted the cleaner air and promised that “the price of cornflakes isn’t going to go up by one penny.”   The Energy Policy Act of 2005 mandated that oil companies actually increase the amount of ethanol mixed with gasoline.  So, did it work?  Did increased ethanol production and consumption reduce oil demand, air pollution and prevent “global warming”?  No, no and of course not.   What it did do, however, was inflate the price of corn, wheat, soybeans, beef, poulty and dairy products and disrupt the world’s food supply. 

I’ll explain how in a minute, but first, let’s look at the hard facts about ethanol.   According to Walter Williams, Professor of Economics at George Mason University: “Ethanol contains water that distillation cannot remove.  As such it can cause major damage to automobile engines not specifically designed to burn ethanol.  The water content of ethanol also risks pipeline corrosion and thus must be shipped by truck, rail or barge.  These shipping methods are far more expensive than pipelines.  Ethanol is 20 to 30% less efficient than gasoline, making it more expensive per highway mile.  It takes 450 pounds of corn to produce ethanol to fill one SUV tank.  That’s enough corn to feed one person for a year.  Plus it takes more than one gallon of fossil fuel—oil and natural gas—to produce one gallon of ethanol.  After all corn must be grown, fertilized, harvested and trucked to ethanol producers—all of which are fuel-using activities.  And, it takes 1,700 gallons of water to produce one gallon of ethanol.  On top of al this, if our total annual corn output were put to ethanol production, it would reduce gasoline consumption by [only] 10 or 12 percent.  Ethanol is so costly that it wouldn’t make it in a free market.  That’s why Congress has enacted major ethanol subsidies, about $1.05 to $1.38 a gallon, which is no less than a tax on consumers.  In fact, there’s a double tax—one in the form of ethanol subsidies and another in the form of handouts to corn farmers to the tune of $9.5 billion in 2005 alone.”

Now, these consequences were intended by creating the ethanol mandate.   In other words, they knew that ethanol was an engine-damaging, water-wasting, oil-burning, tax-subsidized, inefficient bio-fuel, but they were willing to sacrifice all of this for environmental “progress”, government grants and votes.  Of course, it’s never the intended consequences that cause the most damage (though in this particular case, they’re pretty bad).  No, it’s the unintended consequences that deliver the most pain and suffering.

So what are these unintended consequences?   Using corn for fuel increased demand for corn.   So the price of corn and all corn based food products (cereal, corn syrup, tortillas…etc.) went up along with the price of corn-feed used to raise beef, chicken, and make dairy products.  The increased demand for corn and the government subsidies convinced many farmers to forego growing wheat and soybeans and grow corn.   Who could blame them?  Not only were they going to be paid more for their corn in the marketplace, but the government was going to pay them just to grow it.  This shrunk the supply of wheat and soybeans which then caused the prices of food products made directly from these commodities like pasta and bread to go up along with those made indirectly like pork, poultry, beef, milk and eggs.   As result, we are seeing some of the most severe food price inflation in history and the disruption in supply is causing global food insecurity. 

To summarize, we mandated that an inefficient, resource-wasting, expensive bio-fuel that doesn’t reduce oil consumption or “global warming” but does significantly increase food prices and contribute to global food shortages be added to our gasoline.  Thank you again, Vice President Gore.  Not only is this causing pain that Americans are feeling in their wallets, but according to Lester Brown of the Earth Policy Institute: “the World Bank reports that for each 1% rise in food prices, caloric intake among the poor drops .5 percent.  Millions of those living on the lower rungs of the global economic ladder will lose their grip and begin to fall off.”   This could lead to social and civil unrest in many of the world’s poorest countries.

Ethanol is a good example of the economic distress that poor environmental policy can create.  Now that the mandates have been established, corn farmers, ethanol producers and their politicians are going to fight for their continuation.  There is simply too much money involved in this hoax to let it go away.

That is why the Radical Environmental Movement needs to be carefully monitored and sufficiently debated before they create new mandates that have adverse affects on our domestic and global economy.   

When it comes to sound environmental policy, there are those of us who seek the truth, and we cannot afford to allow radical agendas to dictate how our limited resources are allocated.  After all, in the end, it will be our children and grand children who suffer the unintended consequences of the next policy blunder.

...more columns by Todd A. Carges

 Sources:

Williams, Walter; “Big Corn and Ethanol Hoax”; www.townhall.com; March 12, 2008

Brown, Lester; “Why Ethanol Production Will Drive World Food Prices Even Higher in 
    2008”; www.earth-policy.org; January 24, 2008.