The American Spectator

Special Report

Advocates claim that ethanol mandates and subsidies protect our planet, enhance U.S. security, and ease our pain at the pump. In fact, ethanol policy hurts all Americans except for the tiny slice of the population that grows corn or distills it into ethanol.

What is ethanol? Basically, in the United States, it is moonshine derived from the starch in corn. You can drink it. Rowdy collegians have been known to mix 1 part ethanol with 40 parts fruit juice to make huge vats of punch for parties.

The law does not allow you to drink and drive, but it now forces your car to drink before you can drive. Moonshine is in your gas tank because the corn and ethanol lobbies joined forces with defense hawks and oil industry bashers, and persuaded Congress to enact a Soviet-style production quota of 15 billion gallons of Corn-ahol by 2015.

That was a colossal mistake. Government coddling of the ethanol industry makes our food more expensive, raises our taxes, and forces consumers to pay higher prices for motor fuel blends that deliver fewer miles to the gallon.

It also contributes to the global grain inflation that is pushing millions of the world's poorest people to the brink of starvation.

DURING THE PAST two years, corn prices have tripled, wheat prices almost doubled, and rice prices increased almost 150 percent. This rampant inflation in the price of basic staples threatens to push 100 million people back below the absolute poverty line (defined as a household income of $1 a day or less). This would wipe out all the gains the poorest billion people achieved during the past decade.

Josette Sheeran, executive director of the UN World Food Program explains the dire consequences: "For the middle classes" in poor countries, the rise in food prices means "cutting out medical care. For those on $2 a day, it means cutting out meat and taking the children out of school. For those on $1 a day, it means cutting out meat and vegetables and eating only cereals."

And those who subsist on 50 cents a day may not survive at all.

According to the World Bank, "Almost all of the increase in global maize [corn] production from 2004 to 2007 (the period when grain prices rose sharply) went for bio-fuels production in the U.S., while existing stocks were depleted by an increase in global consumption for other uses."

The Bank also notes that although biofuels supply only 1.5 percent of total motor liquid fuels, they accounted for almost half the increase in global consumption of major food crops in 2006-07.

Rising corn prices inflate the price of other staples, because all grains compete for customers and in some cases for land as well. The world is in the midst of a new hunger crisis, and U.S. ethanol policy is a significant aggravating factor.

Food price inflation also puts a real strain on low-income U.S. households. It is not just corn flakes that cost more. Eggs, meat, and milk from corn fed livestock are more expensive, and prices rise on down the line. We're experiencing the worst food inflation in the United States in 17 years.

Ethanol boosters sometimes go to humorous lengths to dress up this economic ugly duckling. Last September, at an energy policy luncheon sponsored by National Review, former-CIA director and ethanol proponent James Woolsey denied that ethanol was inflating food costs, claiming the price of corn had fallen to what it was before America started making fuel out of it -- just above two dollars per bushel. At the time, corn was going for $3.82. Today, it trades well above $7.00.

Ethanol's ablest defender is Robert Zubrin, a colleague of Woolsey at the pro-ethanol Set America Free Coalition. Author of the book Energy Victory, Zubrin writes "In Defense of Biofuels" in the latest New Atlantis.

Zubrin denies that ethanol policy inflates U.S. food prices or exacerbates world hunger, or that increased ethanol production could have these ill effects in the future. He writes, "At bottom, the entire food versus fuel argument boils down to a Malthusian conceit -- that there is only so much that can be grown, so if we grow more of one thing, we must necessarily grow less of something else. But this is simply false."

topics:
Taxes, Trade, Business, Law, Energy, Oil