Corn Ethanol is becoming the Iraq war of energy policy. A policy based on lies, that initially won supporters political advantage, is highly destructive to the US, and ultimately destructive to its supporters when the costly truth becomes widely known.
In 2007, 115 US plants produced 7 billion gallons of Corn Ethanol – the energy equivalent of 132 million barrels of oil using about 15% of corn production. While this sounds large, it is tiny in the context of the US economy. This is equal to only 1.6% of the energy from from oil in 2007 used in the US. But the situation is worse than this because it takes 1 unit of fossil fuel to produce 1.3 units of corn ethanol. The net energy produced was only 0.5% of the energy from from oil – while consuming 15% of the US corn crop!
Vast sums of taxpayer and consumer dollars are funding an ineffective solution to the real problems of global warming and energy independence. While the country does not sufficiently fund what can be real solutions.
The Federal corn ethanol policy is extremely costly to working people in the US and the world’s poor (through higher food prices). The ethanol equivalent of a gallon of gasoline costs far more than a gallon of gasoline. Fueling your car with corn ethanol makes the world grain shortage worse and increases food prices to the world’s poor. 15 gallons of ethanol in your gas tank uses enough corn to feed one person for a year. Higher grain prices, from corn ethanol subsidies, have a big impact on grain feed beef, chicken, milk, and egg prices for hard working Americans.
US politicians love heavily subsidizing corn ethanol because it makes great politics because of the many subsidized winners from this policy – farmers, farm states, companies and workers that make fertilizer, seed, agriculture equipment; banks and venture capital; towns wanting new factories and jobs, construction workers and mis-informed green voters. By supporting Corn Ethanol, politicians can present themselves as Green and pro-energy independence.
There is a major economic boom in US grain farming from the massive government subsidies to corn ethanol from direct payments, credits and mandates for ethanol use – while the rest of the economy is likely in a recession. Oil companies benefit from Corn Ethanol, as it does little to reduce demand for oil and therefore keeps prices up. Big agriculture is more powerful than big oil, as big agriculture is powerful in most states while big oil is concentrated in a few states and many more people work in agriculture and supporting industries than the oil industry.
Another big interest group in the way are politicians who advocated corn ethanol, who now may be better informed that this was a bad policy – but are afraid to change for fear of “flip flopping” charges. Maybe as part the new politics, Democrats can have the courage to say as John Maynard Keynes said, “When the facts change, I change my mind ? what do you do, sir?” Then again there will be others who will do the same as Hillary Clinton did to preserve her reputation by – holding fast to the Iraq war – when it was recognized as bad policy.
It will take political courage to oppose Corn Ethanol’s powerful interests – while the rest of the public are not interested in “policy details.”