Food vs. Fuel

Farmers benefit from higher prices. Up to a point, investors in ethanol refineries also gain from the mandated use of their output (though high corn prices have eroded or eliminated their profits). But who else wins is unclear. Although global biofuel production has tripled since 2000, it still accounts for less than 3 percent of worldwide transportation fuel, reports the U.S. Agriculture Department. Even if all U.S. corn were diverted into ethanol, it would replace only about 12 percent of U.S. transportation fuel (and less of total oil use), according to one study.

Biofuels became politically fashionable because they combined benefits for farmers with popular causes: increasing energy "security," curbing global warming. Unfortunately, the marriage is contrived. Not only are fuel savings meager, so are the environmental benefits. Substituting corn-based ethanol for gasoline results in little reduction in greenhouse gases. Indeed, the demand for biofuels encourages deforestation in developing countries; the New York Times recently reported the clearing of Indonesian forests to increase palm oil production for biofuel. Forests absorb carbon dioxide, a greenhouse gas.

This is not a case of unintended consequences. A new generation of "cellulosic" fuels (made from grasses, crop residue or wood chips) might deliver benefits, but the adverse effects of corn-based ethanol were widely anticipated. Government subsidies reflect the careless and cynical manipulation of worthy public goals for selfish ends. That the new farm bill may expand the ethanol mandates confirms an old lesson: having embraced a giveaway, politicians cannot stop it, no matter how dubious it is.

© 2007