Ethanol’s ablest advocate comes up short.
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WELL, NO, the underlying premise is not Malthus but Econ 101, in which we learn that resources are finite. Hence, changes in either demand or supply affect price.
Zubrin argues as if the supply of farmland were practically infinite. He asserts that the United States has 800 million acres of farmland, of which only 280 million acres are being cultivated. This leaves “plenty of farmland in the United States that could be used to grow more corn…or more of the other staple crops needed to meet domestic or international demand.”
But as Inigo Montoya from The Princess Bride might say, we don’t think that word (“plenty”) means quite what he thinks it means. Dermot J. Hayes, the Pioneer Hi-Bred International Chair in Agribusiness at the Iowa State Center for Agricultural and Rural Development, says that “Zubrin’s just wrong.”
According to Dr. Hayes, Zubrin must be counting land that is totally inappropriate for cultivation, like “land in Wyoming where you couldn’t get a tractor to work.”
Adds Dennis Avery, Director of Global Food Issues at the Hudson Institute, “Efforts to force-feed the U.S. corn ethanol industry are likely to trigger lots of forest clearing,” because even “if all the current output of U.S. corn and soybeans were put into biofuels, it would replace only 12 percent of our gasoline demand and 6 percent of our diesel needs.”
Good farmland is a finite resource. It can be expanded, and technology can make it more productive, but farmland is not free for the taking, not all of it is of equal quality, and most of the best farmland in the United States is already under cultivation.
This means that land for corn competes with land for soybeans and cotton. Thus, when corn plantings increased by 18 million acres from 2003 to 2007, soy plantings fell by 10 million acres, and cotton plantings by 3 million acres.
Land for corn also competes with land for wheat. U.S. farmers increased corn acreage by 18 percent over the past year but increased wheat acreage by only 1 percent. Corn is busting out all over in what used to be known as the “wheat belt.”
The increase in corn is not going to meet food demands. Ethanol manufacture is consuming all the new corn and then some. The calories contained in one tank of biofuel gasoline are enough to feed one person for a year. This means the additional corn consumed by ethanol manufacture could feed over 235 million people a year. Instead, it is fueling SUVs and Priuses.
SO ETHANOL PRODUCTION is pushing up the price of food. Zubrin would also have us believe that it pushing down the price of oil, by augmenting the global supply of liquid fuels.
Zubrin’s evidence is a Wall Street Journal article that cites Merrill Lynch analyst Francisco Blanch, who says that global production of biofuels, by helping plug the gap between the demand for and supply of liquid fuels, keeps oil and gasoline prices 15 percent lower than they otherwise would be. Thanks to ethanol, Zubrin calculates, we’re cutting OPEC’s global revenues by $180 billion a year.
There are two problems with this assertion. One is that oil prices jumped from $102 a barrel, when the WSJ article appeared in late March, to $120 a barrel only six weeks later, and today sells for close to $130 a barrel. In the interim there was no decline in biofuel production and none announced or planned. So there is really no way to tell whether, or how much, biofuel production reduces oil prices.
Second, Zubrin loathes OPEC partly because he views it as a cunning cartel that restricts oil supply in order to increase oil prices. Even if that’s true — and we are not disputing it — the celebrated WSJ article he cites goes on to say that OPEC cut production by 400,000 barrels a day last year — about 100,000 more barrels per day of liquid fuel than biofuel production added to the fuel supply.
For all we know, the 300,000 barrel a day increase in biofuel production did nothing to lower oil and gasoline prices, because OPEC deliberately cut production by more than that amount to offset the supply increase from biofuels.
Zubrin also makes no mention of the fact that ethanol is more expensive than regular gasoline even with oil selling as high as $130 a barrel. Why? Because even if it’s cheaper per unit, it gets about one thirds fewer miles per gallon.
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