Report Questions the True Cost of Ethanol
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?
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.
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.
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.
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. You should also ask yourself why we are not energy independent already. I think the answer to both questions is the same!
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 year was 4.9 billion gallons, yet it is driving up the price of meat, dairy, etc., while not reducing the cost of fuel at the same pace. It’s no wonder why the economy is struggling.
The argument that ethanol is the answer is specious at best, especially if you consider that if automakers improved the average fuel economy of new vehicles just 15% it would reduce U.S. fuel consumption in 2010 by 6 to 8 billion gallons per year, a sum that alone exceeds ethanol. There is a place for ethanol, but the question from a macro level remains, “Is it worth it?”
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.
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.
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 presidential election year. Second, a long-term answer won’t appear due to the U.S. Senate and how farm states have equal representation with two Senators as other states.
All this said from a person who lives in Nebraska.
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!
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.
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.
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 to fuel America on ethanol is nil–but it is also true that we could easily quadruple and more our corn production in a single year. Anyone who a) lives in the Midwest, and b) has some knowledge of how making a living on a farm works today, knows that there is enough land sitting in CRP (Conservation Reserve Program–that’s where the government pays us farmers–yep, I’m one of those too–to NOT grow corn on our land…) to do just that. And that will fuel all the ethanol conversion plants scheduled to come on line for some time–plus feed the world.
Ethanol production is not causing world hunger. If we truly want to solve world hunger–or at least provide more corn–we could do that today. All we need to do is redirect the way the U.S. government incents farmers–oh, and also be willing to accept the consequences in terms of world prices and trade balances. The U.S. farmer won’t feed the world any time soon, but it’s not because we can’t, and it sure isn’t because of ethanol.
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.
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 be manufactured and trucked to sites presently occupied by gasoline stations….
Yeah, well it’s a pipe dream but it could provide a path out of gasoline dependence. We need to dare to dream big. Ethanol is a small answer with even smaller benefits.
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 the form of wet distiller’s grains reducing animal water use by roughly the same amount. The ability of farmers and American’s in general to over produce when incentivised can not be overestimated. Current genetics can produce over 400 bu per acre if the correct conditions are present with reports of 300 bu on a field wide basis becoming more common. (Note: national average for 2007 was closer to 151 bu per acre) At the same time we have moved from producing ethanol at a rate of 1.2 gallons per bushel to over 2.0, with the yield curve for both of these factors to increase dramatically with the new GMO traits currently in the laboratory.
Finally, while new is scary to many people, hunger is not a consequence of ethanol production nearly as much as that hamburger you have for lunch. So, while we worry about how new markets will affect old markets, we should be sure not to begrudge the millions of people that are improving their level of diet and lifestyle, we should be glad that a free market inspires farmers to not only feed a growing world population but also help them fill their SUVs during a time of low oil reserves and increased demand.
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?