Bi-partisan reckless stupidity
Adding injury to insult, the Department of Transportation recently ruled that ethanol can be bumped up from 10% of motor fuel to 15%… meaning even more corn will be siphoned off the food supply so it can go up in smoke on our freeways.
This isn’t a left-right issue. Conservative Larry Kudlow is noting it at the National Review, and here’s how the conservative site RedState described this quintessential pork-barrel program:
It is an unconstitutional regulation that has enriched a few special interests with $7.7 billion taxpayer dollars, regressively drove up the cost of food and fuel; and by extension all products and services that rely on fuel based delivery. The tax credits for energy producers who blend fuel with ethanol have created so many unintended (or intended by some) negative consequences that even Al Gore is calling for its repeal.
It’s a pandering issue, as the Wall Street Journal points out – pandering to voters in Iowa who get to cast the first ballots in the US primary process next year. As long as Iowa farmers get to be king-makers, Democrats and Republicans will continue to bow down before King Corn.
The WSJ has gotten into a shouting match with perennial GOP Presidential hopeful Newt Gingrich, after pointing out on January 22nd that “Amber Waves of Ethanol” were fueling the food price surge.
The Journal noted that
“The former Speaker blew trough Des Moines last Tuesday for the Renewable Fuels Association summit, and his keynote speech to the ethanol lobby was as pious a tribute to the fuel made from corn and tax dollars as we’ve ever heard. Mr. Gingrich explained that “the big-city attacks” on ethanol subsidies are really attempts to deny prosperity to rural America… In his Iowa speak-power-to-truth lecture, he even suggested that the government should mandate that all new cars in the U.S. be flex-fuel vehicles—meaning those that can run on an ethanol-gas mix as high as 85%—as if King Corn were in any danger of being deposed… Some pandering is inevitable in presidential politics…”
Yet today this now-mature industry enjoys far more than cash handouts, including tariffs on foreign competitors and a mandate to buy its product. Supporters are always inventing new reasons for these dispensations, like carbon benefits (nonexistent, according to the greens and most scientific evidence) and replacing foreign oil (imports are up)…
The future looks rocky
Some of these uprisings may lead to the overthrow of cruel dictatorships and a new flowering of democracy.
But revolutions don’t always have happy endings. With instability spreading throughout the Mideast, and poor nations in Africa and South America vulnerable, author/curmudgeon James Howard Kunstler does’t see this ending well for any of us.
“What should amaze us now in the unraveling of this region is how remarkable and long the recent era of stability lasted. Meaning, most of all, how reliable those tanker shipments of oil have been moving through the Straits of Hormuz and the Suez Canal to their destinations in the lands of the Crusaders (and their younger kin in the New World). To put it pretty starkly, the so-called developed world can’t keep its act together more than a week without that steady mainline of Arabian oil…
…Only people paid to flap their gums on Larry Kudlow’s nightly CNBC show, and children under nine years old, believe that anything like “democracy and freedom” will arise out of a street revolt in this region of the world. …There may… be an intermezzo of civil factional interplay, as we saw in Iran thirty years ago, with figures like Shapour Bakhtiar, Mehdi Bazargan, and Abolhassan Banisadr revolving through the turnstile of politics. It doesn’t take long for the turnstile to turn into a meat grinder, and it doesn’t take much vision to see all the things that can go wrong when that happens…”
But because Gingrich, Sarah Palin, et al need to go through the meat grinder of the Iowa Caucuses next year (on their way to the meat grinder of the fall election against a resurgent President Obama), it looks like we’re going to keep turning food into foolishness.
More on ethanol vs food:
- Study Finds Corn Ethanol Just as Bad as Gasoline
- Kick Out The Corn – The End of Ethanol Subsidies?
- Ethanol II – Corn State Reps Fight for their Boondoggle
- Turning Corn into Pork – Ethanol Subsidies are Back
- US Fights Renewable Energy Subsides In China (While Extending Them At Home)
(Image of earlier food riot in Algeria 
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About Jeremy Bloom
And what would you have done with the 40% of the corn crop if we didn’t make ethanol? I suppose we could burn it in wood stoves.
Blaming the political unrest in the Middle East on ethanol is quite a stretch. It is poor country politics that prevents their farmers from producing their own food. We should base our assistance on the credibility of their farm programs to insure their farmers have minimal inputs to produce many times more crops per acre.
To include a quote from that old Big Oil lackey at Cornell, David Pimental seriously reduces your creds.
Hopefully, we will get rid of the blenders credit this year. I suppose we could also follow your advise and let Brazilian ethanol in free when they have surplus ethanol so they can disrupt our domestic ethanol marketing and put more of our farmers on welfare.
You indicate that there is a great conspiracy. You are right, you are playing into the hands of Big Oil. When oil runs out, I hope you are not allowed to have any ethanol. Walking is healthy.
Starve to death three billion wanton procreators and the world will be a better place.
Egypt grows 40% of their food wheat and is the largest wheat importer in the world. Egypt wheat yields are 18 bushels per acre. California wheat yields are 80 bushels per acre. USA average wheat yields are 60 bushels per acre. The Nile Delta is the most fertile cropland in the world.
While ethanol production is heavily subsidized and not environmentally sound practice, it is a subterfuge compared to the price fixing Futures market & derivatives. The real reason for food prices is not ethanol as much as it is WALL STREET and the commodities brokers (one who deals in commodities, ie corn wheat, food or non-food items in bulk) bidding up the price of food on the futures market! This is where a price of an item is bid on before the item, in this one example corn is actually in the market thus setting up a false price based on a pre-assumption of what the commodity brokers think the market will carry. A much more readily available example is the oil futures that raises the price of oil and gas because of perceived political problems in Tunisia and Egypt, or a hurricane prior to making landfall already , we see a rise in the price of a gallon of gasoline because of Futures markets effect..
Jeremy,
Your analysis of food prices is too simplistic. Its a really important issue, but corn ethanol is only one factor. The others include:
1. Weather extremes, probably related to climate change
2. High energy prices
3. The failure of Europe to adopt farming technologies (e.g.) which could reduce their massive food import needs
4. Rising populations in Africa (N and S)
5. Rising standards of living in China and India
Humm, while I don’t disagree with this, I do believe it is extremely short sighted. It doesn’t address the reason we convert corn to fuel in the first place. It doesn’t talk about Monsanto and their GMO’s that farmers are basically forced to buy new seed each year by contract. We forget that not that long ago corn prices were so low farms were going broke by the dozens per month. The aerospace, tech, stock and real estate bubbles have exploded and the US economy is hanging by a threat, threating to take down the world economy. There will be a major re-adjustment. Better get use to it. I am not talking about collapse, just a long slow decline. The world can not support 7-8 billion people!