Report Questions the True Cost of Ethanol

Discussion
Jan 30, 2008

By George Anderson

The nation’s demand for ethanol and producers’ reliance on using corn as a fuel source has increased food prices and raised the real possibility of food shortages in the future, according to a report by the Earth Policy Institute.

“One of the consequences of this enormous shift of grain is that hunger and malnutrition, which were supposed to be declining during this period, haven’t,” Lester Brown, president of the Earth Policy Institute told The Associated Press. “They are now projecting that the 800 million people (living in hunger) will number 1.2 billion by 2025.”

Matthew Hartwig, a spokesperson for the Renewable Fuels Association, said the demand for corn to produce ethanol may be driving up food prices but took issue with the Earth Policy Institute’s conclusions.

“To single out ethanol and biofuels and place the blame for all the ills of the world is a terribly myopic approach to a complex issue,” he said.

Mr. Hartwig suggested that high oil prices also influence food prices.

“Oil prices have gone up 40 or 50 percent and it takes a great deal of oil in particular to transport and process food,” he said.

Discussion Questions: How much of an impact is ethanol production having on food prices? How much of an impact are oil prices having on the cost of food? Do you see a potential for global food shortages as a result of ethanol production? Are there other plant sources for ethanol/biofuels that would help reduce the nation’s dependence on oil and maintain food supplies at the same time?

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16 Comments on "Report Questions the True Cost of Ethanol"


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Arthur Rosenberg
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Arthur Rosenberg
14 years 3 months ago

Where exactly do I fill-up with this earth saving fuel called ethanol? After driving around Florida, parts of California, New York and Nevada, I have yet to see a mention of ethanol anywhere I refuel.

Brett blanchfield
Guest
Brett blanchfield
14 years 3 months ago
Many good comments, Many misconceptions. First, there are several things driving up the cost of corn at the moment, one of the greatest of these is also driving up the cost of fuel–greater demand by “2nd world” economies as they grow, namely China’s demand for all things commodity and their increased appetite for meat rather than a bowl of rice. It takes much more grain to feed a person when consumed in the form of beef, pork and chicken than consumed directly as grain. Second, while switchgrass and other forms of cellulose conversions seem possible on paper, they still are not nearly as efficient as corn. One of the reasons is that corn byproducts still make very good animal feed and this secondary market helps to buoy the economic threshold for these ethanol plants. Other plants will eventually come–see Brazil’s more efficient use of sugarcane. Also, What was that quote, “4 gallons of water to make ethanol”? Maybe, but it is reusable, so the net loss is significantly less, most of which is fed in… Read more »
James Tenser
Guest
14 years 3 months ago
The corn-ethanol solution evidently yields two meaningful outcomes: It enriches a small number of people involved in its production. It gives politicians something to talk about that sounds like progressive energy policy, because it’s “renewable.” As stated by others above, ethanol apparently makes a negative economic contribution overall. This nation has to find the courage to confront an alternative future based on a wholly new transportation infrastructure. Substituting a different liquid fuel is evidently not the long-term answer. But our entrenched investment in gasoline distribution will not be easily transformed. There are more than 100,000 filling stations spaced across the country that make travel anywhere secure and convenient. Any new solution must match this ubiquity to be accepted by the American public. I foresee a distributed solar-hydrogen-fuel cell technology complex. Photovoltaics to extract hydrogen from water using hydrolysis. Amorphous silicon or similar technology to enable safe transport and storage of H2 fuel locally and in vehicles. Fuel cells in cars to convert H2 into motive power. Solar hydrogen stations designed as self-contained units that can… Read more »
Bob Bridwell
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Bob Bridwell
14 years 3 months ago

High prices for corn for ethanol will help to eliminate or reduce the use of high fructose corn syrup that is adding to our obesity problem.

I’ve read that corn based ethanol returns 1.5 units of energy for each unit input, whereas sugar beets are about 8.0 to 1 and switchgrass is about 15:1. Switchgrass is a perennial and is some areas can produce 2 crops per year.

The switchgrass growers have no lobbyists like the corn growers.

Ben Ball
Guest
14 years 3 months ago
There are so many good points here that is hard to know where to start. But there is also much misinformation in the debate. First, let me quickly agree that ethanol is not going to be the sole solution to U.S. energy independence. But we also should not focus on corn as the sole source of ethanol. The citrus industry is already converting peelings and pulp to fuel. Others are working with multiple other sources–basically anything with cellulose is fair game. That could change the dynamics (economics) of production over time. Second, let’s think about this “invade a country with a lot of farmland” thing a minute. Might we suggest invading, say, Nebraska? (Sorry, Mark. Call us if you need help defending the borders.) The U.S. has MUCH more farmland lying fallow than in production today. This entire issue is predicated on the ridiculously flawed premise that America cannot dramatically increase our corn (or any other grain for that matter) production in the short term. Again, it is certainly true that our short term ability… Read more »
David Livingston
Guest
14 years 3 months ago

High food prices? We still live in a country where food is almost free. Between Aldi, Wal-Mart, day old bakeries, home gardens, etc., high food prices are the least of our concerns. If we did have a food shortage we could simply invade a country with lots of farmland.

Ryan Mathews
Guest
14 years 3 months ago

One day we are going to all wake up and figure out that ethanol is–at best–a limited part of the solution to our energy woes. In the meantime, of course the price of corn will go up and of course people around the planet will go hungrier. Ethanol isn’t the sole cause of world hunger but increased demand for corn will limit its availability as a stop-gap crop against world hunger. Free markets aren’t known for either their charity or compassion.

Roger Selbert, Ph.D.
Guest
Roger Selbert, Ph.D.
14 years 3 months ago

Ethanol is not a solution to foreign oil dependence or global warming. It does not significantly reduce energy consumption, is not good for the environment, and raises the price of most foodstuffs. (There were “tortilla riots” in Mexico last year; well, demonstrations against the rising price of corn and tortills). In other words, it makes no sense on any level, except in the corn belt. There are hundreds of studies outlining in great detail the folly of our ethanol policies.

So will we continue and expand the use of ethanol? You betcha!

Mark Hunter
Guest
Mark Hunter
14 years 3 months ago
Saying ethanol is causing the price of some food items to rise is like saying farm profits are made in Washington and not on the farm. Both are true and that’s the problem. Washington is so wrapped up in layers of programs designed to support farming when in the end all they do is skew the global food production model and in turn, pricing. First piece Washington has to admit is that ethanol is not the solution to our energy needs that for some strange reason they believe. Secondly the role of subsidies to produce ethanol and the import barriers they’ve created have further distorted the energy/food sectors. We are also just now beginning to understand the harmful impact ethanol production has on water supplies both underground and off the coast of Louisiana. Ironic how three basic needs, energy, food, and water are all intertwined with government policies at the core of each one. Don’t look for an easy answer for two reasons. First there won’t be a quick answer due to this being a… Read more »
Laura Davis-Taylor
Guest
Laura Davis-Taylor
14 years 3 months ago

We have some excellent learnings from Brazil on this topic, who has effectively nailed this issue with alternative fuels. We also have to remember that meat production creates massive consumption of corn and natural food resources and grain…so it’s not like this isn’t already an issue.

Art Williams
Guest
Art Williams
14 years 3 months ago

Ethanol enables the farmers and farm landowners to smile all the way to the bank even if they have to fill up with high gas prices. Ethanol is not the long-term answer to energy availability or cost containment, but it is an easy political answer instead of having a serious energy strategy. Solving our energy problems will take sacrifice and dedication, two things that are in short supply in Washington.

John Lofstock
Guest
John Lofstock
14 years 3 months ago
I don’t think this report comes as a surprise to anyone. Logic should tell us that if resources are being thrown into one area, that another area is going to suffer. Another ethanol fact that wasn’t mentioned is that it takes about four gallons of water to produce one gallon of ethanol. More importantly, oil analysts have been warning about the chain reaction of ethanol production for several years. Plus, they warned against the false hope ethanol represents. Ethanol production, at best, could probably grow to supply less than one-half of 1% of this country’s fuel demand. Analysts agree that ethanol will not be the answer to the nation’s fuel problems. It rests with reducing consumption. It’s simple market economics. World demand for fuel products is soaring and there is a finite supply of crude. The U.S. consumes about 22 million barrels per day and there are 42 gallons in one barrel of crude oil. That means daily consumption in the U.S. is about 924 million gallons. In 2006, U.S. ethanol production for the entire… Read more »
Ed Dennis
Guest
Ed Dennis
14 years 3 months ago
Ethanol is a prime example of how “jump to conclusions” politics can do more harm than good. Any information source will tell you that it cost more to produce ethanol than the value for the benefit derived from ethanol. In other words, you put a dollar in and get 60 cents out. Our “screaming for a solution” politics has resulted in a new industry that creates nothing but inflation and economic loss. Not only is ethanol production increasing the cost of everything corn related, it is also increasing the cost of every grain crop in America, because acreage is being converted to corn production away from soybeans, wheat, etc. This decreases the supply of these commodities (which represent a good percentage of our exports) raising the cost of bread, soy products and plastics, and increasing our trade deficit at the same time. Had this fiasco been engineered by OPEC as a means of further sapping the USA’s liquidity we would be at war. You will have to decide which groups lead us in this direction.… Read more »
Ryan Mathews
Guest
14 years 3 months ago

Just a factual footnote to Laura’s comments. Ethanol has replaced about 40% of Brazilian gasoline usage (as opposed to the 100 percent some people imagine). Also, Brazilian ethanol comes from sugar cane–not corn. I’m not sure anyone thinks the answer to world hunger is to give sugar to the poor as a primary food.

Gene Hoffman
Guest
Gene Hoffman
14 years 3 months ago

Corny ethanol is not an end in all

When our jaded palates are having a ball.

Food prices boil up for various reasons

Challenging us to adjust to those seasons.

Ryan is probably right, and David too,

But high prices may be caused by you know who.

Mark Lilien
Guest
14 years 3 months ago

In the USA, ethanol is political pandering. Proof? The federal government discourages ethanol imports yet it certainly doesn’t discourage oil imports. I read somewhere that if the first presidential primary was in Idaho, we’d be using ethanol from potatoes. If we’re going to have subsidies for alternative energy sources, why not subsidize all of them impartially? Then the “subsidized free market” could naturally select the best, lowest cost solutions. Why give one subsidy to corn growers but a different subsidy (tax break) to wind farms?

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