Big Corn and Ethanol Hoax
BY WALTER E. WILLIAMS
MARCH 12, 2008
One of the many mandates of the Energy Policy Act of
2005 calls for oil companies to increase the amount of ethanol mixed with
gasoline. President Bush said, during his 2006 State of the Union address,
"
Ethanol contains water that distillation cannot remove. As such, it can cause
major damage to automobile engines not specifically designed to burn ethanol.
The water content of ethanol also risks pipeline corrosion and thus must be
shipped by truck, rail car or barge. These shipping methods are far more
expensive than pipelines.
Ethanol is 20 to 30 percent less efficient than gasoline, making it more
expensive per highway mile. It takes 450 pounds of corn to produce the ethanol to fill
one SUV tank. That's enough corn to feed one person for a year. Plus, it
takes more than one gallon of fossil fuel -- oil and natural gas -- to produce
one gallon of ethanol. After
all, corn must be grown, fertilized, harvested and trucked to ethanol producers
-- all of which are fuel-using activities. And, it takes 1,700 gallons of water to produce one gallon of
ethanol. On top of all this, if our total annual corn output were
put to ethanol production, it would reduce gasoline consumption by 10 or 12
percent.
Ethanol is so costly that it wouldn't make it in a free market. That's why
Congress has enacted major ethanol subsidies, about $1.05 to $1.38 a gallon,
which is no less than a tax on consumers. In fact, there's a double tax -- one
in the form of ethanol subsidies and another in the form of handouts to corn
farmers to the tune of $9.5 billion in 2005 alone.
There's something else wrong with this picture. If Congress and President Bush
say we need less reliance on oil and greater use of renewable fuels, then why
would Congress impose a stiff tariff, 54 cents a gallon, on ethanol from
Ethanol production has driven up the
prices of corn-fed livestock, such as beef, chicken and dairy products, and
products made from corn, such as cereals. As a result of higher demand for
corn, other grain prices, such as soybean and wheat, have risen dramatically.
The fact that the
It's easy to understand how the public, looking for cheaper gasoline, can be
taken in by the call for increased ethanol usage. But politicians, corn farmers and ethanol
producers know they are running a cruel hoax on the American consumer.
They are in it for the money. The top
leader in the ethanol hoax is Archer Daniels
The ethanol hoax is a good example of a problem economists refer to as narrow,
well-defined benefits versus widely dispersed costs. It pays the ethanol lobby
to organize and collect money to grease the palms of politicians willing to do
their bidding because there's a large benefit for them -- higher wages and
profits. The millions of gasoline consumers, who fund the benefits through
higher fuel and food prices, as well as taxes, are relatively uninformed and
have little clout. After all, who do you think a politician will invite into
his congressional or White House office to have a heart-to-heart -- you or an
Archer Daniels Midlands executive?