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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