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Do-gooders and Politicians Support Faulty Ethanol Policy

We can’t save the planet by burning our food.

How else than as the love child of environmentalists with no understanding of science and politicians with a perfect understanding of buying votes could America have arrived at its ethanol policy?

It almost makes sense to me, actually, considering an e-mail I received from an environmental extremist in my neighborhood. Here’s a quote (not a paraphrase):

“I am afraid that we as a species have already done so much damage that there is little hope of our survival, and that we will drag many others down with us. I am not in love with Homo sapiens; I hate being one. We practise "speciesism," the belief that Homo sapiens is the pinnacle of life, and has the inalienable right to steamroll everything else. Yes, I do hope that we, with our destructive, egocentric habits, will have phased ourselves out or blown ourselves up within a couple of generations.”

Or a more succinct version of the same thought, from the same person: “In defense of the Earth, I hope we are extinct in 50 years. Chances are good. Then old Gaia can go about healing herself.”

Yes, in that context it makes some sense that liberals would support an ethanol policy that essentially amounts to “let’s burn our food.”

More shocking is how long it took for the world to wake up to just how terrible an idea corn-based ethanol is, and particularly the government’s encouraging the conversion of huge amounts of arable land to growing corn instead of other crops in order to grab a subsidy for ethanol.

Liberals are the same people who believe that government revenue will increase as tax rates increase because they think people are too stupid to change their behavior as the environment (whether economic or physical) changes. And politicians might have understood the ramifications but didn’t care as long as the subsidy bought them votes at home.

So, the liberals must never have considered the massive distortions, the massive food inflation, and the third-world starvation they would cause by supporting ethanol as our energy savior, and politicians just didn’t care.

At least until now.

On Friday, Energy Secretary Samuel Bodman made comments subtly but clearly backing away from corn-based ethanol’s overuse. He acknowledged the questions about ethanol in every aspect from efficiency to “impact on land and water resources and world food supplies.”

The current issue of the Economist has a special feature on “The new face of hunger” in which they mention the conversion of corn into ethanol (instead of into food) as a factor in increasing misery and near-starvation, as well as in widespread riots around the world.

And just last week, the debate exploded in Europe, with some people calling biofuel production “a crime against humanity”. The IMF Chief Economist said that the US and Europe need to “rethink” their promotion of biofuels, and noted that the fastest food price inflation in many years is now causing nations which typically export food to implement a “new form of protectionism” by restricting exports.

The problem with ethanol isn’t just about the fact that it adds to the forces which are causing Third World residents to go hungry. It also does not help the environment. Just a month ago, one of the UK government’s leading scientists said that biofuels could make climate change worse rather than better.

(Significant man-made climate change is another myth. For now, it suffices that even those who believe in it are now recognizing that ethanol does not accomplish its original goal of reducing greenhouse gas production.)

In President Bush’s State of the Union speech in January, 2007, he supported impossible and irresponsible goals of reducing gasoline usage by 20 percent in ten years, in part by massively increasing reliance on ethanol. The camera panned to Iowa Senator Charles Grassley who had a huge grin on his face and I thought to myself, “Wow, this is going to be expensive.”

Even I didn’t know just how expensive, however. When the government started effectively subsidizing corn production, people starting switching away from producing wheat and soybeans and cotton, so the prices of all those commodities exploded. Now, the price of rice is going up, causing tremendous hardship in Asia. The price of feed for animals, made out of various grains, is therefore much higher, causing the $4 gallons of milk we now find at the supermarket as well as higher prices for other dairy products, eggs, and meat. Ethanol production also puts huge strain on water supplies. According to one article, it takes 1,700 gallons of water to produce one gallon of ethanol. It’s a lot easier to live with burning gasoline than live without water.

Other aspects of ethanol are bad, too. It’s corrosive, so it tends to eat away parts of engines, fuel transport vehicles, and pumps, unless they’re retrofitted with material that will not be degraded by the ethanol. It is much less energy-dense than gasoline, so one gallon of ethanol will tend to get your car anywhere from 10% to 30% fewer miles than a gallon of gasoline. And of course, there’s the subsidy…$7 billion in 2006 for less than 5 billion gallons of ethanol…most of which goes into a few Midwestern states, thus causing Senator Grassley’s Cheshire Cat grin as he imagines our tax dollars buying his votes. Without the subsidy, ethanol wouldn’t be even close to gasoline as the best answer for our cars, financially speaking, particularly when considering ethanol’s much lower efficiency.

If the government says that we really need ethanol, tell them to remove the large tariff on Brazilian ethanol which is not made from corn. That tariff proves that the value of the ethanol program from Washington, DC’s point of view is simply to funnel money to American corn growers, not to actually get the best of cheapest forms of fuel to American consumers. The politicians are getting what they want and the environmentalists aren’t smart enough to know that not only are they not accomplishing their goals with ethanol, but Grassley and people like him are using their movement as pawns in the standard political vote-buying game.

In short, ethanol is a disaster that could only have been imposed on us by a frightening alliance between do-gooder environmentalists and do-themselves-better politicians.

It’s time for citizens to stand up and scream “No more ethanol mandates, and no more subsidies”! It’s time for politicians and environmentalists to listen…if not to our screams then to those of people who are starving because of their schemes.

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Written By

Ross Kaminsky has been a professional derivatives trader for over 20 years. Ross is a fellow of the Heartland Institute and writes about political economy and current events at Rossputin.com. He also contributes to blogs for the National Taxpayers Union and FreedomWorks among others.

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