Dangerous Dan Thoughts and musings on the world

3/16/2007

Ethanol Foolishness

Filed under: General — Dangerous Dan @ 10:19 pm

There are few more foolish movements right now than the drive towards biofuels, specifically ethanol. This drive has gained momentum due to President Bush's cheerleading since he wants something… anything… to make him sound like an environmental president. Add on to this the massive corn lobby, led by ConAgra, and you get an enormous boondoggle that will benefit a few at the expense of everyone else.

There are several problems with ethanol, which in the U.S. is made almost entirely from corn. The first is that it's not clear that you get a net gain in energy from its production. The feds say you get nearly a third more energy from ethanol than what's put into it, but other studies have indicated that there's actually a net energy loss once you calculate fuel used for transport (due to its water-absorbing nature, it can't be shipped via pipeline), fuel used in tractors, fertilizers and pesticides used, harvesting, conversion, etc., etc. This means that far from increasing energy independence for the U.S., an oft-stated justification, it's actually increasing how much fuel and energy we use. It's frankly difficult to get a good gauge on the net gain or loss of energy concerning ethanol because most of the reports and studies are from folks in the pocket of one industry or another.

Ethanol also doesn't produce as much energy as gasoline. There's a reason we use gas as a fuel, after all, and it's because the liquid has a tremendous amount of energy packed into it per unit. Ethanol is not nearly as energy efficient, meaning that you lessen the mileage in vehicles.

The other sizable problem is that recent increased ethanol production is driving up prices in the entire food sector. Whether you realized it or not, corn is used in a wide variety of food products, including as the sweetener in damn near everything. Due to so much corn being diverted for ethanol production, the price for corn is going up; it's doubled in the past year. We already know about the riots in Mexico because prices for corn tortillas are on the rise, but it goes further than that. High-fructose corn syrup is more expensive and therefore everything that uses high-fructose corn syrup will become more expensive. Meat prices are also going up because ever-pricier corn is used to feed livestock. Even prices for other crops are increasing because farmers are planting more corn instead of things like soybeans. The end result is that food producers are either going to lose money or they're going to pass along their expenses to the consumer. Guess which one it will be? According to Labor Department stats (for which I couldn't find a link, but these are from 3/16/07 Wall Street Journal, page C1), "prices for 'crude foodstuffs and feedstuffs' were 18.8% above year-ago levels" and "wholesale consumer food prices were 6.8% above year-ago levels." That the latter stat is lower than the former just means that it hasn't yet caught up, but it will get there. A nearly 19% or 7% increase in just one year is big and most of it can be attributed to corn-based ethanol. Thanks, Iowa! I hate you!

In short, the results of the pipe dream of a renewable fuel are that the fuel possibly uses more energy than it generates, it contains less energy than fossil fuels, and it's raising food prices for all consumers. This is potentially the most worthless – no, costly – endeavor ever pushed by the federal government and there's plenty of competition for that august award. Ethanol is a bum deal that hurts everyone and benefits Big Corn almost alone. It's nice to know that their lobbying money is paying off for them. Meanwhile, I'd prefer it if the feds would stop meddling in the market, stop endorsing foolish technologies, and if Bush would just shut the hell up about ethanol… like maybe not mentioning it in the State of the Union address as he has at least the past three years.

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