Thursday, April 9, 2009

Burning food

The baneful impact of the ethanol mandate is becoming more and more evident. While it makes food more expensive, it has a negligible—and potentially negative—impact on the environment. It increases inflation in a high-unemployment economy, while failing to significantly reduce greenhouse gasses. Agribusiness seems to be the only real beneficiary. From Congressional Budget Office [CBO]:
Over the past several years, spurred by both rising gasoline prices and long-standing subsidies for producing ethanol, the use of ethanol as a motor fuel in the United States has grown at an annual average rate of nearly 25 percent. U.S. consumption of ethanol last year exceeded 9 billion gallons–a record high. ....

....Most ethanol in the United States is produced from domestically grown corn, and the rapid rise in the fuel’s production and usage means that roughly one-quarter of all corn grown in the U.S. (nearly 3 billion bushels) is now used to produce ethanol. The demand for corn for ethanol production has exerted upward pressure on corn prices and on food prices in general. CBO estimates that the increased use of ethanol accounted for about 10 percent to 15 percent of the rise in food prices between April 2007 and April 2008. ....

Last year the use of ethanol reduced gasoline usage in the United States by about 4 percent and greenhouse-gas emissions from the transportation sector by less than 1 percent. .... In the long run, if increases in the production of ethanol led to a large amount of forests or grasslands being converted into new cropland, those changes in land use could more than offset any reduction in greenhouse-gas emissions—because forests and grasslands naturally absorb more carbon from the atmosphere than cropland absorbs. .... [more]
Director’s Blog » Blog Archive » Ethanol, Food Prices, and Greenhouse-Gas Emissions

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