December 3, 2007

December 3, 2007 | Commentary on Energy and Environment

Ethanol policy - what a turkey

Ethanol subsidies are raising our food prices - dubbed the "Thanksgiving Tax" because it upped the cost we paid for Thanksgiving dinner.

Turkey farmers need almost three pounds of corn for every pound of meat put on the birds. But they must outbid those who buy up the corn to make ethanol, thanks to a 51-cents-per-gallon ethanol tax credit and other federal incentives.

America paid $69 million extra for our Thanksgiving turkeys due to ethanol mandates. That's what Joel Brandenberger of the National Turkey Federation told a Heritage Foundation audience. But it's just a small part of what he labeled the Thanksgiving Tax.

With almost a fourth of the corn crop now diverted to ethanol, it's costlier to feed the chickens, the hogs and the grain-fed cattle. Egg prices are up. Corn meal, corn syrup, and even my personal favorite (popcorn!) are pricier. So is almost all food, as other grains are in higher demand as a substitute for corn.

Bottom line: America pays $9 billion a year more for our food because of ethanol policy. The problem is growing faster than any crop. A recent U.S. Department of Agriculture report says farmers are planting more corn rather than other grains, constantly reducing the supply and thus raising the price for those crops. High grain costs are discouraging farmers from raising cattle and other animals, thus further increasing meat and egg prices. The food industry has a website outlining the ripple effect on our groceries.

That's the bad news. Now the worse news: Congress is about to mandate that we triple the use of ethanol. So take all these extra costs and multiply them by three or more.

Today's mandates already require gasoline sellers to blend in at least 5 billion gallons of ethanol a year. With a 51-cent-a-gallon subsidy, this costs taxpayers $4.5 billion on top of higher food prices. Congress plans to triple the mandate to 15 billion gallons a year. The House and Senate each have already agreed on that as part of their energy bill, but the legislation is still hung up in one of those Washington jaw-fests called a conference committee.

That gives us time to think this through and also to consider the other spin-offs from the ethanol mandate.

Environmentalists are starting to understand that more ethanol requires more corn, which requires more arable land. For example, Brazil is cutting down more rain forests to meet its national ethanol mandates. Incentives for other biofuels make the clear-cutting even worse, since cellulose plants like switch grass have less energy content than corn. They require eight times as many acres to produce equivalent amounts of energy. One estimate says the pending energy bill would require planting enough switch grass to cover the state of Ohio.

Fertilizing, harvesting and transporting such quantities to an ethanol distillery is also energy-intensive, dramatically reducing the supposed benefits to the environment.

There's a basic truth that cannot be altered - each drop of crude oil has an energy content that far surpasses the same amount of corn, switch grass or anything else. As Scotty always said to Captain Kirk, "Ye cannot repeal the laws of physics!" A gallon of ethanol can't take you as far as a gallon of gasoline because there's less power in it. Yet the current Congress won't agree to let America produce more oil from places like Alaska or from offshore - or let us build more refineries or nuclear powerplants

On the other hand, ethanol has a big and successful lobby. Having its champion state, Iowa, as the first place to hold a presidential contest also discourages contenders from picking a fight against ethanol.

As a Heritage Foundation study concluded, the costs of the ethanol mandate are substantial, while the benefits are small at best. We're paying the price with tax money, with higher fuel prices and with higher food prices.

Yes, corn is great chicken feed. But the cost of ethanol is not. This Thanksgiving Tax is nothing to be thankful for.

Ernest Istook is a distinguished fellow in Government Relations.

About the Author

Ernest Istook Distinguished Fellow
Government Studies

First appeared in World Net Daily