Ethanol Subsidies, the Newest Regressive Tax Scheme?

Someone was talking recently about Americans being walking corn fritters–quite literally a corn-fed, corn-fried populace. We eat corn directly, and most livestock consume it as well. So we’re mostly corn to a secondary (and possibly tertiary, but I don’t even want to go there) level. But guess what else comes from corn? Ethanol. So while Bush is trotting the globe touting ethanol, we’re already seeing the price of corn rise domestically, and this article predicts we’ll soon see that reflect in consumer food prices, if we haven’t already.

I posted last year about how ethanol as a motor fuel is mostly a crock to allow auto manufacturers to cheat the CAFE standards. But what I didn’t get into was the science and economics of ethanol–that it’s production uses more energy than it delivers, that the production of its ingredients requires vast amounts of fertilizer (which are, ironically, overwhelmingly petroleum-based), that it taxes already stretched water and soil resources, and that it directly affects the markets for some of the staple world food crops (and their byproducts).

From one perspective (the fat, car-addicted American one) this is a good thing: when our mouths and our gas holes are competing for the same resource maybe we’ll realize just how unsustainable the energy budget is. There simply isn’t enough arable land (and many would argue usable solar energy) available in the world to both feed everyone and keep all the machines guzzling at current levels of consumption, much less future levels. Think about it. Every barrel of oil (and all fossil fuels) we burn today is imported energy from the distant past–it’s literally solar and tectonic energy transported to us across millions of years. For the last hundred years, that added energy has artificially bolstered the human energy budget–more humans exist and engage in more energy-demanding activities (flight, manufacturing, entertainment) than would be possible without that extra energy input. I’m all for weaning ourselves off that (we’ll have to, because the oil is not infinite–the only other option is nuclear, and we’ll eventually have to go there anyway). The problem here is markets–what happens when ethanol plants can pay more for the corn than tortilla factories can? A $4 gallon of ethanol may soon become very attractive to some, but a $4 taco means starvation for many.

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