One of the most politically charged decisions the lame-duck Congress will face when it reconvenes is deciding whether to extend subsidies for corn-based ethanol. As rising prices for grain set off alarms among ranchers, consumers and environmentalists, ethanol lobbyists are counting on their generous contributions to key legislators to protect their reserved seats at the governmental feed trough.
Several key subsidies - including high tariffs on imports of foreign ethanol and tax credits for ethanol blended into gasoline - are set to expire at the end of December. Congress must decide whether to continue down a track of underwriting food for fuel that resulted in the conversion of 25 percent of the U.S. corn harvest in 2007 to ethanol, a share that experts say will steadily rise in the coming decade along with oil prices.
The only thing “green” about ethanol is the material that goes into making it. Large quantities of fresh water are required for its manufacture, and corn production requires high levels of fertilizer that are transported by the Mississippi River into the Gulf of Mexico, resulting in oxygen-starved dead zones. Ethanol delivers less than half the energy of conventional gasoline per gallon.
In a world where millions are starving daily, the use of foodstuffs for fuel additives is a short-sighted solution to energy independence. The United States is by far the major global exporter of corn, and for decades a glut of those yellow kernels stacked up in Midwest granaries. Now America has little available for export. Acreage for growing more corn is in short supply, and failed harvests of wheat and soybeans in Asia this year are pushing up competition for available U.S. farmland to grow those crops.
The competing demands on corn inventories - to feed fowl and livestock, fill boxes of packaged cereals on store shelves, and as feedstock for ethanol - have contributed to jumps of 70 percent in the value of corn futures over the past few months.
The Environmental Protection Agency’s recent decision to raise the maximum allowable ethanol in blended gasoline from 10 percent to 15 percent has prompted warnings of coming meat price increases. J. Patrick Boyle, CEO of the American Meat Institute, told the San Antonio Express-News that American consumers will pay for ethanol in higher price tags on holiday turkeys, hams and other meat products.
As political analyst Timothy P. Carney of the Washington Examiner observes, the incoming Republican House majority should be tilted by ideology toward cutting government spending on special interests, including the ethanol industry. Because of ethanol’s political clout, he predicts “lobbyist connections and campaign cash, however, will pull the GOP toward continuing subsidies.”
There are many justified federal energy subsidies, but corn ethanol isn’t one of them. A country with massive shale gas reserves like the United States should be focused on stimulating technological innovations to use it for transportation.
Ethanol made from nonfood vegetable matter is also a promising future fuel source whose development merits tax incentives. But propping up the corn ethanol industry is a political entitlement for Midwest farmers and manufacturers that wastes tax dollars while making U.S. consumers pay more at the grocery store. Not to mention depleting grain surpluses that could help feed an increasingly hungry world.
