Ethanol Hurts the Poor

We here at Casual Kitchen don't claim to be experts in energy policy.

But even we can understand that there's an inherent wastefulness and lack of logic in the production and use of ethanol. Especially when it causes knock-on economic effects--including increases in both food and fuel prices--that hit our least fortunate citizens where it hurts the most.

A quick tutorial on ethanol. Ethanol burns poorly in internal combustion engines, which is why if you find it at your gas station at all, it's in relatively low concentrations of at most 10-15% ethanol and 85-90% traditional gasoline. This fuel can be made from many types of crops, and in the USA the primary source is corn. Therefore, technically, this makes ethanol a "renewable" fuel source.

Sadly, however, the production and use of ethanol does not cause any net reduction in fossil fuel use. In fact, it causes us to burn more fossil fuels than we would otherwise. Why? Because you're stuck using additional fossil fuels to plant, fertilize, irrigate, grow and harvest the corn. And then you have to use still more fossil fuels to heat and process the corn to make it into ethanol.

Think through that last paragraph. Making ethanol most likely wastes more fossil fuels than it replaces. Heck, even if you have just a rudimentary understanding of the first law of thermodynamics, the illogic of our ethanol policy should be transparently obvious.

But it gets worse. Corn is one of the most important commodities in our entire food and ag universe. You find corn (or corn byproducts) practically everywhere in our food supply. Corn plays a role in the livestock industry, thus it impacts meat costs. Growing corn for fuel diverts land away from other ag uses, leading to knock-on price increases in other crops. Further, corn is such an important input in our entire food system, that when corn goes up in price, nearly everything else goes up in price too.

Of course it goes without saying that food price inflation hurts our poorest citizens the hardest.

Corn is also a key ingredient in the combine of political power and corporate welfare that is U.S. alternative energy policy. The food-to-fuel mandate is known as the Renewable Fuels Standard (RFS) and requires 13.2 billion gallons of ethanol to be blended into the gasoline supply this year and 36 billion gallons by 2022. These quotas are fulfilled almost entirely by corn ethanol. Four of every 10 bushels in 2011 went into the stuff. For the first time ever, more corn is devoted to the fuel than to livestock.
--Ethanol vs. the World, from The Wall Street Journal

Add all this up and think through the intelligence (or utter lack thereof) of our nation's ethanol policy: The government pays enormous subsidies to ag companies at taxpayers' expense. Ethanol production burns as much or more fuel as it makes, meaning no net reduction in fossil fuel use. Ethanol diverts resources away from food production. Ethanol doesn't reduce our carbon footprint--in fact it increases it. Finally, corn prices go higher, which causes a chain reaction of price increases across nearly all foods.

This is an excellent--in fact, nearly a flawless--example of a well-meaning government policy that hurts the poorest Americans the most.

Readers, I want to hear your thoughts and reactions.

For further reading:
The Cellulosic Ethanol Debacle
Everyone Hates Ethanol

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Emmy said...

The government doing something that makes no sense? (insert shocked face here).

It's very sad. Our leaders are so nearsighted. Maybe they're thinking this deficit will resolve itself through higher volume?

Another sad thing, that corn prices will affect the poor so much. I wish it weren't so, because they ate less processed foods.

Thanks for sharing this, Dan. I never thought about it - probably because I expect our nation's leaders are competent. You know what they say about assuming...

Loris said...

I hate corn. It's such a waste of money and land space.

The only reason why it's so popular is that the US governament is subsidizing it so heavily, it is now the cheapest crop that can be produced in America.

In fact, so much excess corn is produced that we constantly *have* to find new ways to use it: from animal feeding to oil production to HFCS and now (mandatory!) ethanol.

I have it stuck in my head that if corn was not so artificially cheap, we would be living in a healthier, saner society. And "grass fed" wouldn't translate to "crazy expensive".

Daniel said...

I think the broader subject of corn and its role in our food economy is beyond the scope of this post (it's also beyond my capabilities to discuss competently!).

That said, I want to try to keep this thread focused on the more narrow issue of ethanol.


Becca said...

In addition to hurting the poor, it compounds the burden on taxpayers because when the poor can't afford their own food, they turn to government programs like WIC and food stamps. It hurts everybody.

chacha1 said...

I personally favor ending ALL agricultural subsidies for ALL commodities ... but would settle for ending all government payments to agricultural corporations earning more than 1 million dollars (gross) per year. That would cut the agriculture department's budget by, probably, 80% right there.

I also favor invalidating all of Monsanto's GMO patents, but that's another rant. :-)

Little Old Les said...

This post is right on. But I just read your comment about keeping the thread narrowed on ethanol. I think that's pretty hard to do since the corn economy has been fully integrated into both food and energy for quite some time.
The "farm" bill (haha) helps corporations that grow and process corn (into tortillas and wallboard), corporations that make fertilizers and seed chemicals (yeah, they innoculate seed with anti-fungals and other yummy-ness), corporations that make medicine for cows (because they aren't meant to eat corn and it makes them sick), and lets not forget those big old energy corporations which not only provide the energy for making the fertilizers & medicines, but that also formulate and transport the 10% ethanol crap that doesn't even burn well in your car.
An endless list of companies benefit from the "farm" subsidies. Its just a big ol' party of lobbyists and corporate execs up there in DC, all bitching about high taxes.
I'm going to go check on my tomato seed starts, now. :)

Little Old Les said...

I just read the comments about the title on facebook, and had another thought:

Is is possible that ethanol could actually HELP the poor (or disadvantaged, or whatever label seems least patronizing- haha) by raising the price of crappy processed corn products to the point where it becomes cheaper to eat locally grown, healthy produce?


Naahh, that won't happen. They'll just increase the subsidies.

Bing said...

How can it be a well-meaning policy when it's so obviously terrible? Well-meaning to help corn farmers? Ethanol producers?

Anonymous said...

I like that you start post by saying "We here at Casual Kitchen don't claim to be experts in energy policy." Because I sort am an expert (or at least aspiring to be) I know that high oil prices hurt the poor much more. Oil prices are a huge factor contributing to inflation, raising the price of everything and have been shown to be directly related to food prices
Ethanol controls rising oil prices, so if anything, ethanol helps the poor.

Daniel said...

Anonymous, the various steps involved in processing and making ethanol collectively waste more fossil fuels than the ethanol itself replaces. I'll say this as clearly as I can: this is not how you lower oil prices. It simply doesn't follow.

One more aspect to consider: look into the negative impact ethanol has on your car's fuel efficiency. There's quite a bit of evidence suggesting ethanol makes your car get worse gas mileage! Another irony, and another potential source of fossil fuel waste. I probably should have raised this issue in the post.


chacha1 said...

For the record, I *do* think concentration corn production on non-food uses hurts the poor.

It also hurts the environment and the economy, which means it hurts everybody else too.

IMO the ethanol policy is the manifestation of a cynical pretense of investing in renewable resources (by way of corporate giveaways) so that politicians can claim they are trying to reduce dependence on foreign oil without actually reducing the USE of foreign oil, which is processed and sold by politicians' corporate donors.

Alea said...

As a farmer's wife (in Idaho - no corn here) - I must reply to the farm bill comments. First of all 84% of the farm bill money goes to food programs such as school lunches and food stamps. Only 11% goes to farmers. So we're not getting as much as you think. Also - I think most farmers would agree, we'd be happy to get rid of subsidies if we were allowed to operate in a free market.

I would also like to point out that research is being done to create ethanol out of corn stalks. That would allow 2 uses out of the same crop, and would keep prices for food & feed lower. I'm in agreement with several other commenters about eating so much corn - yes it's cheaper for people, but it can't be healthy.

Little Old Les said...

To Alea - I know what you mean. That's why I put "farm" in quotations when I wrote "farm bill". The "farm" bill has very little to do with farmers these days, unfortunately.