As has been pointed out many times the search for a "renewable" energy source, such as bio-fuels, is not without a cost. In the case of ethanol however, the irrational decision to forge through with corn ethanol when sugar ethanol is a better choice is coming home to roost. many people laughed at the riots in Mexico a few months back because corn prices had sent the price of tortillas skyrocketing.
We here north of the Rio Grande can expect prices of all food to skyrocket as well. And in the spirit of capitalism, not just on products made of corn, or it's derivatives, such as corn syrup. We should expect the rising cost of corn to encourage farmers to switch crops to get their share of the action, this will drive up other grain prices as farmers make that switch. But it is not just limited to food prices, corn ethanol plants are energy pigs, as it takes more energy to convert corn ethanol than it yields. A small to moderate ethanol plant uses 1,000,000 gallons of water every day, that is not a small demand, especially in rural areas where these plants tend to be located. And who pays for the infrastructure upgrades to the water system? For the answer look at our water bill.
And finally, why are we investing so heavily in corn ethanol when other sources, such as sugar, can yield more ethanol per acre and would effect the cost of food to a lesser extent than corn? Our friends, the Democrats! The Democrats needed to reach out to Midwest farmers to break the GOP's infamous "Bible Belt". They did so by courting the corn farmers, first with subsidies and now with corn ethanol plants. This phenomenon is not new, it has been around for decades, but the escalation in the price of petroleum made companies actively invest in ethanol instead of deride it as a fringe alternate, and in the US corn is virtually synonymous with ethanol. Another phenomenon, this one totally artificial in nature, is global warming. In response to global warming another wave of investors got in on corn ethanol plants, these are green groups. So the fringe left using their pet theory of global warming, and capitalists, using greed as their primary motivation, both invested in the corn ethanol plants.
But I once again digress... the Democrats bought the Midwest farmers with subsidies. They now have to keep them on the hook with corn ethanol. But the implications of higher food prices across the board, from cereal, to soda, to candy, to meat, to milk, to eggs, to poultry, to bread, etc. , may well prove grim to the US, but the effects on the rest of the world may prove to have more dire effects. While the US has to worry about being inconvenienced by higher prices, other parts of the world, that are dependent upon the US for food (grain, poultry and meat), will have to worry about survival. The US grows 25% of the world's food. Diverting huge portions of that may help defray the cost of driving to Grandma's house on Sunday, and may reduce emissions along the way, but billions of people dependent on US food sources will have much more dire concerns, such as when they'll be eating the next time.
So sugar ethanol can benefit sugar farmers (they just got subsidies in the House Iraq spending bill) by making them work instead of paying them to not plant fields. Peanut farmers (also recipients of subsidies) can be paid to grow their fields as peanuts as well as soy can be used to manufacture bio-diesel. The Democrats claim to want energy independence, and claim to be supporting family farmers, but are married to a system that only will hurt the US. Instead of giving farmers subsidies not to grow we need to diversify the sources of fuel and let the farmers earn their money on the open market.
I guess the Democrats won't suggest that until they can find a way to turn paying a farmer a fair price for his crops into an entitlement. They don't care about high food prices, they don't care about the billions reliant on the US for food, they don't care that they lose energy with every gallon of corn ethanol, they just care about keeping their special interests happy. It's all about the votes and the lobbyists money!
CS Monitor: midwest real estate: http://www.csmonitor.com/2007/0322/p01s01-usec.html
BBC: biofuel demand affects food prices: http://news.bbc.co.uk/2/hi/business/6481029.stm
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