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Pro: Ethanol subsidies a double-whammy raising taxes and food prices

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David A. Ridenour
April 19, 2008
EDITOR’S NOTE: The writer is addressing the question, Is overplanting of ethanol crops responsible for soaring food prices?

Move over “Bridge to Nowhere,” there’s a new poster child of congressional waste and avarice—ethanol, the “Fuel to Nowhere.” Ethanol leads only to higher food prices and greater greenhouse gas emissions.


Anytime Congress can find an excuse for shoveling out billions of dollars in pork, it’s a safe bet there’ll be a stampede of Democrats and Republicans to vote “Aye.” Such has been the case with ethanol ever since Congress latched onto the idea that it could be sold as a means of cutting greenhouse gas emissions.


Congress has already authorized billions in taxpayer-funded subsidies for farmers who grow corn and the producers who turn it into the fuel that’s pumped into your car.


Never mind that ethanol is helping spike food prices. Corn prices have already increased by 70 percent since 2005 and the U.S. Department of Agriculture projects they will rise an additional 10 percent to 20 percent this year.


But that’s not the half of it. Corn-dependent livestock are also increasing in price. The USDA estimates that corn feed price increases added nearly 9 percent to the price of beef last year. But this doesn’t include the indirect costs. U.S. beef cattle herds declined by 338,000 in 2007, increasing beef prices further, in part, due to higher prices for feed, according to the American Farm Bureau Federation.


Ethanol advocates claim that rising corn costs have contributed only modestly to the overall increase in food prices. They’re not being entirely honest, as they’re only counting the direct costs of ethanol. They don’t count, for example, increases in soybean prices resulting from farmers switching to the more lucrative corn crop. Soybean crops dropped by 11 million acres last year—much of it used to produce corn.


The corn growers and Big Ag, flush with new-found cash, have generously increased their campaign contributions, making everyone happy—everyone, that is, but consumers and taxpayers.


Taxpayers are shelling out billions of dollars while getting nothing in return, making ethanol truly a fuel to nowhere.


Worse, the ethanol program is not reducing greenhouse gas emissions as promised, but increasing them. That’s according to two new, independent, scientific studies published in the journal Science.


One study, by the University of Minnesota and the Nature Conservancy, concluded that further converting the rainforests, grasslands and savannahs of Southeast Asia and South America to crops for bio-fuels will increase greenhouse gas emissions, perhaps for centuries, while destroying important habitat.


A second study, by researchers at Princeton University, came to a similar conclusion, finding that corn-based ethanol would produce twice the greenhouse gas emissions as conventional gasoline over the next 30 years. The recently passed energy bill is expected to create even greater demand for ethanol because it requires the United States to ramp up biofuel production to 36 billion gallons by 2022 from 7.5 billion gallons today.


Don’t count on Congress amending the energy bill to correct its glaring ethanol mistake anytime soon, though. Rep. Edward J. Markey, chairman of the House global warming committee, dismissed the studies, saying they show “where we are, not where we’re going to be.” Markey says technological advances will be driven by federal mandates, noting, “Once you set the standard, then it’s going to drive where the investment is made, where the breakthroughs are.” Since ethanol currently is 30 percent less efficient than gasoline, those breakthroughs will have to be truly heroic.


Mandating technological innovation has been tried before and failed, as it did in the 1970s with the synthetic fuel program.


That hasn’t stopped lobbyists from continuing to argue that a federal cattle prod is the best way to force greedy capitalists to accomplish the impossible.


But as Viking King Canute showed his courtiers when be commanded the tide to cease to no effect, the heavens, earth and the seas obey only one King. Markey isn’t the one.


David A. Ridenour is vice president of The National Center for Public Policy Research (www.ncppr.org), a conservative, free-market organization. Readers may write to him at NCPPR, 501 Capitol Court NE, Washington, D.C. 20002.

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