R.I.P. – Stupid Ethanol Policy

Our mid-western water resources have been drying out – rather permanently and dramatically for decades. You only have to look at a kernel of corn, round and juicy, to understand that corn uses an un-Godly amount of water to come to harvestable quality. That our profoundly ignorant government elected to “fight foreign oil” by lacing our gasoline (10% ethanol, 90% gasoline; the government wanted to raise ethanol to 15%) with highly subsidized locally produced ethanol is a testament to American idiocy on steroids.

Drought has slammed into the Southwest and Midwest. Parched earth crackles and withered corn stalks dry up and blow away. What’s worse, the once massive Ogallala Aquifer (at its peak, the size of Lake Huron, running under so many Midwestern grain belt states) will drop to 20% of its capacity by 2020. This dying resource is not remotely replenishing to past levels and could actually run dry.

Much of this water was used to produce corn to produce ethanol to serve as a gasoline additive. Not only does this crop suck down precious and dwindling water, but its diversion as a fuel-source also drove up the cost of feed grain so high as to kick the cost of meat and poultry through the stratosphere. The process of converting corn to ethanol also requires heat, which in turn requires massive additional energy to… er… make energy?! This government program appears to be a poster child for policy failures with lots of waste built in.

What made matters worse is that the U.S. government slammed a nasty tariff on ethanol produced from Brazil’s overabundant (and easily irrigated) sugarcane crop, so that corn could be wasted instead. This Bush-era program saddled taxpayers with both the underlying subsidy of corn farmers and the higher costs of the resulting ethanol. Just five years ago, “[b]acked by government subsidies and mandates, hundreds of ethanol plants rose among the golden fields of the Corn Belt, bringing jobs and business to small towns, providing farmers with a new market for their crops and generating billions of dollars in revenue for the producers of this corn-based fuel blend.” New York Times, March 16^th. A false and uneconomic business created by people who simply denied that global warming was real. Red states on environmentally destructive farm-driven welfare that produced no benefit for anyone beyond those directly benefitting from the subsidy?!

So lots of these folks are now losing their jobs as oil reserves are being discovered and as the harsh economic reality of climate change drills into the underlying motivations for creating the program in the first place. “Nearly 10 percent of the nation’s ethanol plants have stopped production over the past year, in part because the drought that has ravaged much of the nation’s crops pushed commodity prices so high that ethanol has become too expensive to produce…

“Thousands of barrels of ethanol now sit in storage because there is not enough gasoline in the market to blend it with — and blends calling for a higher percentage of ethanol have yet to catch on widely in the marketplace. Advanced biofuels from waste like corn stalks and wood chips have also yet to reach commercial-level production as some had predicted they would by now…  Referring to the plants that have been idled, Eric Lee, a commodities expert at Citibank, said: ‘Is that going to be temporary or permanent? It’s hard to say.’” NY Times.

And as gas prices have gone up in economically impaired times (prices have moderated of late as demand has subsided), more efficient vehicles and more fuel consciousness have become the norm, dropping our current demand for gasoline from 9.7 (in 2007) to 8.7 million barrels a day. The 45 cents per gallon tax credit on ethanol expired at the end of 2011, and this additive is clearly falling from grace rapidly. The program never made sense, and with the subsidy gone, it’s just not worth it anymore. While better technology is reducing the energy required to convert corn to ethanol, the fact remains that corn uses too much water to remain the staple of a program designed to be a vehicular fuel additive. It’s time to phase this program out entirely, and if ethanol is a beneficial additive, let’s buy it from Brazil where the environment is left intact. We can use the corn solely as a feed/food crop once again.

I’m Peter Dekom, and when a stupid policy is clearly dying by reason of mistaken calculations, there are no good reasons to keep taxpayers funding something that actually hurts them!