A Bad Harvest

The myths of ethanol get a thorough airing by the Associated Press today. This is a long article that examines a lot of different issues and questions about the sudden ethanol craze. (It is a Yahoo News link, so it will expire, sorry). But a few highlights stand out.

For all the environmental and economic troubles it causes, gasoline turns out to be a remarkably efficient automobile fuel. The energy required to pump crude out of the ground, refine it and transport it from oil well to gas tank is about 6 percent of the energy in the gasoline itself.

Ethanol is much less efficient, especially when it is made from corn. Just growing corn requires expending energy — plowing, planting, fertilizing and harvesting all require machinery that burns fossil fuel. Modern agriculture relies on large amounts of fertilizer and pesticides, both of which are produced by methods that consume fossil fuels. Then there's the cost of transporting the corn to an ethanol plant, where the fermentation and distillation processes consume yet more energy. Finally, there's the cost of transporting the fuel to filling stations. And because ethanol is more corrosive than gasoline, it can't be pumped through relatively efficient pipelines, but must be transported by rail or tanker truck.

In the end, even the most generous analysts estimate that it takes the energy equivalent of three gallons of ethanol to make four gallons of the stuff. Some even argue that it takes more energy to produce ethanol from corn than you get out of it, but most agricultural economists think that's a stretch.

Get that? The best case estimate is that the overhead for producing ethanol consumes the energy equivalent of 75% of the fuel itself. As opposed to 6% for gasoline. This is a huge step backward. But it gets even worse from there.

Making ethanol is so profitable, thanks to government subsidies and continued high oil prices, that plants are proliferating throughout the Corn Belt. Iowa, the nation's top corn-producing state, is projected to have so many ethanol plants by 2008 it could easily find itself importing corn in order to feed them.

But that depends on the Invisible Hand. Making ethanol is profitable when oil is costly and corn is cheap. And the 51 cent-a-gallon federal subsidy doesn't hurt. But oil prices are off from last year's peaks and corn has doubled in price over the past year, from about $2 to $4 a bushel, thanks mostly to demand from ethanol producers.

High corn prices are causing social unrest in Mexico, where the government has tried to mollify angry consumers by slapping price controls on tortillas. Lester R. Brown, president of the Earth Policy Institute, predicts food riots in other major corn-importing countries if something isn't done.

U.S. consumers will soon feel the effects of high corn prices as well, if they haven't already, because virtually everything Americans put in their mouths starts as corn. There's corn flakes, corn chips, corn nuts, and hundreds of other processed foods that don't even have the word corn in them. There's corn in the occasional pint of beer and shot of whisky. And don't forget high fructose corn syrup, a sweetener that is added to soft drinks, baked goods, candy and a lot of things that aren't even sweet.

I mentioned this in a post I made on Friday as well. Food prices are going to climb – sharply – as a direct result of this ethanol frenzy. Production facilities are springing up everywhere in the Midwest. More and more corn is heading to those plants and away from the food production that relies on corn. And that is an astonishing percentage of total food production in this country and around the world. Corn is used in many things in one form or another. This "magical silver bullet" is a boondoggle and yet another eco-swindle that will have disastrous long-term consequences. The sowing of the ethanol myth will yield a bad harvest for the world.