Ethanol growth is a losing game
By KEN MIDKIFF
Published Friday, February 29, 2008
(http://archive.columbiatribune.com/2008/feb/20080229comm002.asp)

There is little doubt that ethanol production has provided a new market for corn growers. The price per bushel of corn had been stuck for years as the cost to make that bushel rose. Until recently, corn was actually a loser. Farmers depended upon the largesse of the U.S. government - in the form of subsidies - to make ends meet.

But now, with a growing demand for ethanol made from corn - spurred by "government incentives," which are nothing more than another form of subsidy - corn prices are rising, from a many-years’ average of about $2 per bushel to today’s $5.44. If you raise corn, that’s good news.
More money per bushel is the upside. There are all sorts of downsides to ethanol production and use.

• It’s unclear whether ethanol is energy-efficient. Some studies have shown it takes almost twice as much energy to produce ethanol than ethanol is capable of producing - a net loss. Other studies show a net gain of about the same amount. As the debate goes on with no clear winner at this point, politicians - not easily deterred by facts - continue to grant incentives and subsidies for ethanol plants and mandate the use of ethanol as a fuel or a fuel additive.
  
• In general, internal combustion engines use 25 percent more ethanol than gasoline. Stated another way, motor vehicles get 25 percent less power from ethanol compared with gasoline. Mileage goes down, and so does "oomph."
  
• The subsidies going to ethanol and corn production render the "free market" aspects null and void. The growing of corn is heavily subsidized, and the production of ethanol is even more so - about 85 cents per gallon. So we all pay for this dubious product.
  
• If every kernel of corn now produced would be converted to ethanol, about 7 percent of our energy demand would be met. Those who claim that by producing ethanol we are reducing our demand on foreign oil are technically right. But let’s face it: 7 percent isn’t much. And, of course, if every grain of corn were to be converted into ethanol, there would be no corn in the feed of farm animals and no corn flakes (or the ubiquitous high-fructose corn syrup) for us. Since every grain of corn will not be used for ethanol production, much less than 7 percent of our energy needs will be met by ethanol - 3 percent is probably optimal.
  
• Ethanol production and use arguably emit more carbon dioxide than oil and gas production and use. This might be mitigated by using other methods of production, but the current method contributes mightily to global warming. Of course, burning anything results in emissions of carbon dioxide, but it is not likely we’ll reduce our addiction to the internal combustion engine any time soon. It is telling that gasoline powers the tractors and combines used to grow and harvest corn.
  
• If this country’s energy demands were to be totally met by ethanol, about 97 percent of our land would be devoted to corn production. There’s a word for this: monoculture. Producing more and more ethanol will lead to converting more and more land to grains - primarily corn at this time. That means that less and less land will be devoted to other things. Biodiversity will suffer; not only in this country, but in developing nations such as Brazil, where millions of acres of forests are being whacked down and burned to produce grain for ethanol.
  
• The prices of other grains have gone up dramatically as more and more acreage is dedicated to growing corn. Although there remains an enormous demand for oats, wheat and soybeans, it is currently much more profitable to grow corn. When corn is grown to the exclusion of about everything else, everything else costs more.
  
• Not that it matters to me, but the price of feed for factory farm operations has risen to the point that costs outweigh any profits. Ethanol subsidies have been bitterly opposed by such corporate agribusiness organizations as the National Pork Producers Association and the Cattlemen’s Beef Association, and they have little recourse but to raise the price of milk, meat and eggs.

The downsides of ethanol are many. It promotes monoculture, does little or nothing to rein in emissions of the primary global warming gas, is of questionable efficiency and does little to do away with our dependence on fossil fuels.

Ethanol production costs billions of taxpayer dollars. There is really only one "pro" - that’s higher corn prices.

But politicians of every stripe have jumped on the ethanol bandwagon. Party affiliation doesn’t make any difference. At the state level and the federal level, legislators throw money at corn growers and ethanol plant owners and are falling all over themselves to show how committed they are to ethanol production.

As with any subsidy system, there are winners and losers: a few winners, many losers.