Stop the Ethanol Madness

Ethanol is one of those really bad ideas that just won't seem to go away. It's a crummy fuel additive. It is corrosive in engines and storage facilities and requires special handling for delivery. It knocks a point or so off gas mileage at a time of heavy government pressure on manufactures to produce ever more efficient vehicles. We could get better mileage if, like Europeans, we just switched to diesel. And of course ethanol isn't added to diesel fuel.

It disrupts the nation's food supply with ripple effects felt all over the world. Forty percent of America's corn crop goes into ethanol, and that's in a good year. This year's drought is expected to reduce yields by 15% or more and, with ethanol content levels in gasoline mandated by law, the shortfall will have to be absorbed in food products and animal feed. And it diverts prime crop land from other uses.

We had food riots around the world four years ago. Don't be surprised to see them again. For most Americans a shortage of bacon or rib eye is an inconvenience. For third world paupers subsisting on less than $1.25 a day even a small increase in the price of gruel is a catastrophe. Expect to see more children with distended bellies on the nightly news.

I don't see anything in the news from US Catholic Bishops but the United Nations has called on the US to suspend or reduce the mandates this year, if only temporarily. So have beef, pork, and poultry producers. Don't hold your breath. Iowa is a swing state. Both presidential candidates support continuing mandates to provide stability in the industry. Agriculture Secretary Tom Vilsack says that without ethanol the price of gasoline would be more than $1 higher than it is. Ethanol's critics say that claim is laughable.

Environmentalists turned against ethanol a couple of years ago. Its carbon footprint is higher than the gasoline it replaces and runoff from pesticides and fertilizers pollutes the rivers. Algae bloom from phosphates creates the dead zone at the mouth of the Mississippi. It is questionable whether ethanol even yields more energy than its production consumes.

Probably the strongest argument proponents make is that ethanol reduces dependence on foreign oil. But we don't import as much oil as we did a few years ago and it looks as though the trend may continue, with or without ethanol. The shale boom is still in its infancy and with oil around $100 per barrel there are all sorts of promising technologies on the horizon.

It's time to drop the mandates. We already stopped the subsidies. If Secretary Vilsack is right consumer demand will keep the refiners in business. If he is wrong and the price of ethanol-free gasoline drops they will likely go broke. Isn't that how capitalism is supposed to work? If investors bet on a sound business model they make money. If it turns out it is unsound they lose. Any time government subsidies, or mandates, are used to keep a business afloat it is the taxpayer who pays. Nobody benefits but agribusiness and their hangers on. Add to the list of losers the poor, the environment, the economy, and just about everybody who depends on the automobile for transportation.

These are hard times. One presidential candidate is projecting more social spending with trillion dollar budget deficits and an anemic economy far into the future. The other proposes to get the economy growing again at the cost of draconian cuts in spending that, whatever else we think of them, are going to hurt. Either way there are some boondoggles we just can't afford. Ethanol is one of them. Stop the madness.