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Sunday, January 28, 2007

State of Denial

The Bush Energy Plan too focused on corn ethanol.

The latest White House Energy plan, which looks the same as the 2006 plan, focuses on inefficient corn based ethanol as well as "clean" coal burning plants. While he does mention cellulosic ethanol, the reaction of Senator Tom Harkin and other congressmen from the corn belt make it evident that corn based ethanol will be the focal point in getting to that 20% reduction in gasoline consumption. While the corn states stand to benefit handsomely from this energy policy, the shift from foreign oil to ethanol makes little sense if you look at the facts. Not only does corn ethanol have lower fuel efficiency compared to gasoline, but the amount of processing involved, the fertilizer, and the all those lovely subsidies make it more costly than importing oil, at least at current prices. On top of that, corn based ethanol is only slightly better in terms of greenhouse emissions.

An even bigger consequence of shifting the source of our fuel supply from oil to corn is the effects on our domestic food supply. The Wall Street Journal, among others, had a great article (subscription req'd) on the impact this energy policy will have on our economy.

To start, the article mentions that 20% of our corn crop is now devoted to ethanol production, whereas 5 years ago it was only 3%. This has led to a steep increase in the price of corn, up 80% in 2006, and has made a huge ripple effect across the food chain in North America, from the higher prices cattle farmers have to pay to feed their stock, to the 30% increase in the price of corn tortillas, a staple in the diet of most Mexicans.

So, while Senator Harkins, his fellow Iowans, and others in the corn belt are very pleased with this energy policy, I am sure once the facts are known the majority of Americans concerned with this issue will be left scratching their heads. Move over big oil, its time for big corn.

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