September 27, 2022

Ethanol, More of a Problem Than a Cure

Paul Krugman points us to this Bloomberg article that makes the case against the Bush administrations ethanol mandate fairly well.  Some highlights:

  • About 33 percent of U.S. corn will be used for fuel during the next decade, up from 11 percent in 2002
  • Farmers will have to increase planting of corn for ethanol by 43 percent to 30 million acres by 2015 to meet the government’s requirements
  • Corn [prices] doubled in the past two years, touching a record $5.29 a bushel today in Chicago.
  • Increased demand for the grain helped boost food prices food prices by 4.9 percent last year, the most since 1990, and will reduce global inventories of corn to the lowest in 24 years
  • The price of young cattle sold to feedlots gained 8.7 percent in the past year
  • Researchers led by Timothy Searchinger at Princeton University said their study showed greenhouse-gas emissions will rise with ethanol demand

A spot-on quote in the article came from Cal Dooley, a former U.S. congressman from California, president of the Grocery Manufacturers Association, who said:  "We are mandating and subsidizing something that is distorting the marketplace.  There are no excess commodities, and prices are rising.”

Shocker.

This has been a well-publicized problem in Mexico for over a year now and the corn price increase there and elsewhere is only going to get worse as more U.S. production is turned into fuel.

The sad fact is that ethanol is significantly less efficient than petroleum products.  While ethanol provides a short-term buffer against higher oil prices, the Bush administration is forcing America to rely on product whose production cannot be sustained long-term.

The next administration would be wise to slow investment in this technology in favor of nuclear and hydrogen power sources as these should provide more benefits in the long-term.

marc

Marc is a software developer, writer, and part-time political know-it-all who currently resides in Texas in the good ol' U.S.A.

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