Ethanol, Starvation, and other Liberal ideas

Democrats once accused Republicans of wanting old people and children to starve to death because the Republicans wanted to end the welfare state’s food stamps program.  So why are they silent on the government program that’s actually causing starvation and food shortages?  Oh. Right.  The ethanol boondoggle is their idea. 

Bio fuel mandates have brought $5 a gallon milk here, tortilla riots to Mexico and even a shortage of bagels in Bethesda.  Many other strong arguments against biofuel mandates, and especially against corn ethanol, have existed for years and continue to be highly relevant. 

Jerry Taylor, of the Cato Institute, wonders why people across the political spectrum believe that issues from energy prices to greenhouse gases to terrorism can be solved by grain alcohol (particularly by burning it rather than drinking it.) He also notes that comparisons between ethanol and “snake oil” are somewhat unfair…to snake oil: “snake oil was a harmless placebo.  Ethanol consumption, on the other hand, is a truly dangerous economic poison.”

Although different arguments tend to appeal to the different viewpoints, neither liberals nor conservatives have a monopoly on costly biofuel foolishness.

Among liberals:

1)  Ethanol produces fewer greenhouse gases (“GHGs”), and is generally better for the environment than gasoline. 

• Although ethanol blends from corn grown in Iowa, the best corn-growing region in the world, are estimated to have GHG effects slightly better or slightly worse than gasoline, depending on how you account for co-products made in the process, as soon as you move to less efficient corn growing locations, GHG emissions are far greater than for gasoline production.  Taylor estimates, for example, that “GHG emissions from ethanol are about 32% greater when the corn is grown in Georgia” than in Iowa. This is critical because Iowa and other nearby states already substantially devoted to corn production will not be the source of substantial new supply. Most new supply will have to come from places whose lower efficiency means much more environmental damage from ethanol than from gasoline.

• Early math on ethanol ignored carbon emissions coming from farmers converting grassland and forest into farms, either to grow corn, or to grow other crops which need to be replaced after farmers elsewhere switched from those other crops to corn to capture the government subsidy. One study, published in Science Magazine argues that such land conversion “creates a ‘biofuel carbon debt’ by releasing 17 to 420 times more CO2 than the annual greenhouse gas (GHG) reductions that these biofuels would provide by displacing fossil fuels.” To add insult to the environmentalists’ injury, this massive increase in atmospheric CO2 in the name of ethanol comes in part by destroying rainforest.

• Ethanol production requires a lot of water, and is more dangerous to our water supply than petroleum-based fuels alone, in part because ethanol is more corrosive than gasoline, making it more likely to eat through a tank and get into the water supply and then because, once in the water supply, it has substantial negative effects including allowing any other nearby pollutants to more easily dissolve in the water.

2) Ethanol is a renewable fuel. 

• Yes, corn is renewable.  But the source of ethanol’s energy is not primarily from corn. A study by professors at California’s Berkeley University says that “only 5 to 26% of the energy content (of corn ethanol) is renewable. The rest is primarily natural gas and coal.” Ethanol is essentially a way to fuel our cars with coal, and not a particularly efficient way at that. 

Among conservatives:

1) Ethanol will give us reliable energy independence.

• Last March, in an article entitled “Corn Can’t Solve Our Problem”, two University of Minnesota professors put it plainly: “If every one of the 70 million acres on which corn was grown in 2006 was used for ethanol, the amount produced would displace only 12 percent of the U.S. gasoline market. Moreover, the ‘new’ (non-fossil) energy gained would be very small — just 2.4 percent of the market. Car tune-ups and proper tire air pressure would save more energy.”  Professor Vaclav Smil noted that using corn ethanol to replace petroleum based liquid transportation fuel would require “slightly more than twice the country’s entire cultivated area”.  And, if you need to hear it yet another way, James and Stephen Eaves put it like this: “We find that devoting 100% of U.S. corn to ethanol would displace 3.5% of gasoline consumption.” In other words, it is not possible for corn ethanol to make a meaningful contribution toward reducing reliance on oil, unless we were willing to starve to death to do it.

• However, even if corn ethanol could make a serious dent in gasoline use, there is another risk hardly ever discussed: The risk of crop failure.  Although we worry about disruptions to oil production and supply whenever there is a terrorist attack, a war, or an OPEC meeting, it turns out, according to Jerry Taylor, that “analysis of U.S. corn production data from 1960-2005 finds that corn yields varied almost twice as much as did oil imports over that period. Referring the Eaves paper linked above, Taylor offers this: “If past is prologue, then in 1 out of every 20 years, we can expect U.S. corn yields to decline by 31.8 percent.  On the other hand, in 1 out of every 20 years, we can expect oil imports to decline by 14.9 percent.  Displacing gasoline with ethanol is to exchange geopolitical risk with yield risk and history suggests that the latter is about twice as great as the former.”

2) Ethanol is a weapon in the war on terror by reducing demand for oil. 

• The gasoline use which ethanol substitutes for, as explained above, is so small that it is unlikely to change the price of oil by more than a fraction of a percent.

• There hasn’t been any correlation between oil prices and Islamic terrorism. Terrorism really isn’t a particularly expensive undertaking.  It’s almost certainly more difficult for Bin Laden to find the right people and get them the right training than to fund the relatively small costs of operations. According to the 9/11 Panel, planning and executing the attack of September 11, 2001, by far the worst terrorist attack in history, “cost (Al Qaeda) an estimated $400,000 to $500,000, not including the hijackers’ training in Afghanistan. The hijackers spent about $270,000 in the United States, mainly on flight training, travel, housing, and vehicles.”

Incorrect economic arguments for ethanol:

1) Ethanol subsidies are only fair, given existing subsidies to oil companies.

• Depending on which parts of the tax code you consider to be subsidies, federal tax benefits to oil companies amount to between $1 billion and $2 billion annually, far less than a penny per gallon of gasoline, given that Americans use about 385 million gallons of gasoline every day.  Ethanol subsidies, on the other hand, are estimated to be between $6.3 and $8.7 billion annually, or between $1.06 and $1.45 per gallon.

2) Ethanol is economical.

• Beyond the travesty of using massive subsidies to fool Americans into believing that ethanol is economically competitive with gasoline, most consumers do not realize that a gallon of ethanol contains far less energy than a gallon of gasoline. E-85 ethanol (a blend of 85% ethanol and 15% gasoline) has only 72% of the energy of regular unleaded.  Therefore, you need to buy 10 gallons of ethanol to get as far as 7 gallons of gasoline will take you.  Even with the lower pump price for a gallon of E-85 ethanol than a gallon of gas, the “BTU-adjusted price” for E-85 is about 10% higher than gasoline…and you have to stop at the gas station more often.  And don’t forget, it’s 10% higher AFTER the huge costs to taxpayers. Including subsidies, on a mile-per-mile basis, E-85 ethanol is at least 40% more expensive than gasoline. 100% ethanol would be that much worse.

In a report entitled “Biofuels — At What Cost?”, running a “Flex-fuel vehicle” (“FFV”) on E-85 instead of gasoline is estimated to cost federal taxpayers about $700 per year, plus another $200-$400 per year in rebates in certain states.  “Were all of America’s six million FFVs to run on E85, the cost to the U.S. treasury would be between $3 billion and $4 billion a year (depending on the actual fuel economy of the vehicles), just in tax credits alone. Counting state incentives, the figure would rise to at least $5 billion.”

So, let’s get this straight:  American taxpayers pay, directly or indirectly, roughly 40% to 50% more for corn ethanol than for gasoline, in order to use a product, the combustion or production of which:

• Is bad for the environment (land, air, and water)
• Does not reduce greenhouse gas emissions (I do not believe that should be an important policy goal in any case)
• Is not renewable
• Does not effect Islamic terrorism
• Will not offer us energy independence
• Will not offer a more certain supply of energy than oil, and
• Costs us billions of dollars a year for all these negative effects.

The Heartland Institute’s James Taylor believes that “ethanol’s days are numbered. The environmental, economic, and humanitarian costs are undeniable, and no longer is the public oblivious to these very significant costs.” The question now is whether public pressure can overcome the entrenched interests in the ethanol business, not least of which are politicians from the farm belt who buy votes with our fuel dollars.