..A must read for for every US voter and concerned citizen.. challenges the reader to explore new possibilities and new mindsets that will ultimately be required if the world is truly ready to make a change.. amazon.com US only1.
Commentary
America's Food-To-Fuel Problem
Art Carden, 02.10.10, 04:00 PM ESTGovernment-mandated ethanol production is bad any way you shuck it.
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Government enthusiasm for "green" initiatives has given us a series of allegedly well-intentioned programs that have been both environmental and economic disasters. Consider American ethanol. The two-headed beast that is good intentions and unintended consequences rears its ugly head in the form of environmental degradation and higher food prices--a source of inconvenience in rich countries but a matter of life and death in very poor ones.
Government attempts to reduce our dependence on fossil fuels are manifesting themselves in diversion of the food crop to fuel production. The Wall Street Journal reported on Aug. 8, 2008, that as much as one-third of the Midwestern corn crop will be diverted to ethanol production; the Government Accountability Office forecast that approximately 30% of the U.S. corn crop would be devoted to ethanol production by 2012; and the Earth Policy Institute reported Jan. 21 that the U.S. devoted approximately one-fourth of its grain crop to ethanol production.
Whether ethanol programs will be easy or difficult to undo politically remains an open question, but I am pessimistic. The disastrous consequences of bad business decisions are reflected in the bottom line and will be corrected rather quickly (Enron stock, anyone?). Politics has no such feedback mechanism and indeed encourages people to waste resources fighting for and against ethanol mandates through the political process. K Street lobbyists and government officials will devote valuable resources--time, energy, knowledge and money--to a wasteful political battle. In short they will waste resources in a battle to waste resources.
Rising food prices in response to ethanol mandates also illustrate an important point raised by Ludwig von Mises in his various critiques of interventionism--there is no such thing as an isolated government intervention. In this case the problem was clear: How do we produce a cleaner-burning fuel that also reduces our reliance on foreign oil? The solution, which was to subsidize ethanol production and mandate its inclusion in gasoline, seems at first fairly straightforward. Instead of burning fossil fuels, we can burn corn byproducts.
But then the law of unintended consequences manifests itself in two ways. First, the political process means the beneficiaries will be favored political constituencies. Instead of importing sugar-based ethanol from Brazil, we are refining it from corn in a very inefficient process.
Whether ethanol is even energy-neutral is debatable, as it requires almost as much energy to produce as it actually produces, and the environmental consequences in the form of more extensive and intensive land cultivation are ambiguous. Paul Krugman once put it succinctly on his blog: Ethanol is "[b]ad for the economy, bad for consumers, bad for the planet--what's not to love?"
Second, intervention in one sector distorts prices and incentives in another. The change in conditions will be bad for at least some people, who will then be encouraged to seek relief through the state. Since the state has already intervened to fix the fuel shortage and global warming, it will be very difficult for the state to credibly say that it will not intervene elsewhere. Ask not for whom the state intervenes: If it intervenes for thee, then why not for me?
Yesterday's American ethanol mandate is today's Haitian food riot and next week's African famine. This illustrates the nature of government intervention, and it should teach a lesson we all need to learn. When a policy produces predictable changes in incentives, it should be evaluated based on its effects rather than its intentions. It is also a lesson in humility: Our articulated visions of a good Earth or a good society will often go horribly awry. Economists are often derided for not knowing exactly what will happen after economic or institutional change--what will people do if they don't work in the heavily protected manufacturing or agricultural sectors?--but this structural ignorance is precisely why we cannot, indeed should not, proceed with reckless regulation.
Art Carden is an assistant professor of economics and business at Rhodes College in Memphis, Tenn., an adjunct fellow with the Oakland, Calif.-based Independent Institute, and an adjunct scholar with the Auburn, Ala.-based Ludwig von Mises Institute. He is a regular contributor to Mises.org,Lifehack.org and Division of Labour.
http://www.forbes.com/2010/02/10/ethanol-environment-government-initiatives-opinions-contributors-art-carden.html?partner=contextstory
2.
Commentary
Biofuel-Polluted Politics
Gary Sutton, 02.10.10, 12:00 PM ESTWhy the ethanol lobby is scoring wins with the Obama administration.
Gary Sutton
San Diego -- Barack Obama flew around in Archer Daniels Midland's private jets after becoming a senator, according toa New York Times story in June 2008. ADM is the largest corn-into-ethanol processor in the world. The story suggested there might be some controversy in this, should Obama become president. Obama's economic policy director at the time said the senator's opinion was based on its own merit.
Obama was an ethanol cheerleader in the senate while Hillary had voted against it over and over as a senator. Her position changed just before the first presidential primary, which takes place in Iowa, the Corn State. Iowans didn't go for Hillary's switch-a-roo. Obama bushwhacked her in that upset.
Let's connect political dots here.
In November 2009 the Environmental Protection Agency obediently sent a letter to one of the ethanol lobbies, Growth Energy, assuring it that EPA was optimistic over boosting the percentage of ethanol in gas, from 10% to 15%. EPA is currently testing the 15% mix.
"Should the test results remain supportive," Gina McCarthy, assistant administrator of the EPA said to General Wesley Clark, co-chairman of Growth Energy, "and provide the necessary basis, we would be in a position to approve E15 for 2001 and newer vehicles."
Now, a little history.
ADM is built upon political arm-twisting. Sometimes this doesn't work, like in 1996 when ADM paid what was then the largest price-fixing fine in U.S. history. ADM's internal mantra was reported to be: "The competitor is our friend and the customer is our enemy." ADM's behavior was so bad that the judgment was upheld, even though officers had regularly sent checks to the Nixon, Humphrey, Bush, Carter, Mondale, Reagan, Dukakis, Dole and Clinton campaigns. Rosemary Woods, Nixon's secretary, testified that ADM's chairman brought $100,000 in cash to the White House. ADM also reportedly paid for Hubert Humphrey's son's tuition.
In 2002 ADM ( ADM - news - people ) was found guilty of violating the Clean Air Act at its processing plants. It shut down the dirtiest facilities and cleaned up the rest. Again in 2006, the Environmental Protection Agency caught ADM polluting at its Illinois processing plant. In the grain industry ADM was nicknamed "Another Dead Man" due to its awful safety record.
If you're a corn farmer, your kernels might well end up at ADM. To grow the crop, you plow, seed and fertilize your fields in the spring. Your tractor burns diesel fuel to do so. Your primary fertilizer, anhydrous ammonia, is a chemical made from natural gas. In the fall you harvest, using your tractor again, burning more diesel fuel. After picking the corn a processor cooks it to distill the alcohol, burning lots and lots of natural gas.
Most of our population, and cars, are near the coasts. Most of our corn is raised in the middle of the country. So the final step is transporting tanks thousands of miles for blending. Unlike oil, it's volatile. We can't pump it through pipelines. So even more fossil fuels are burned to deliver the ethanol.
"Ethanol made from corn is particularly bad," says Richard Muller, professor of physics at UC, Berkeley. According to Muller's textbook, "You use almost as much fossil fuel to make the ethanol as you get in biofuel."
The EPA's letter to the ethanol lobby says they'll test the 15% ethanol for long-term damage to cars is by running it through 14 more vehicles by next May.
Rigorous, eh? All of 14 vehicles. They've got 2 in testing now. Wow!
There's a question about whether cars built before 2001--about half the vehicles on the road--can use the 15% mix without damage. So we might even see some pumps for the 10% blend and some for the 15% blend. This, of course, means small rural stations won't have enough pumps for the new and old, but that's their problem, I guess. Larger stations will need to isolate the pumps so consumers won't get rattled and use the wrong fuel.
There's one thing gas stations like about ethanol, besides higher prices. It disguises bad fuel. When the storage tanks aren't full, and the temperature drops, condensation forms inside. That's water. Alcohol attracts water. Water in gas was obvious in older cars--they "pinged" when accelerating, so stations had to be more careful about their storage. Today's vehicles automatically retard the spark for bad gas, so the driver thinks everything is okay. What the driver doesn't know is that the miles per gallon dropped. So with more ethanol, more water can slip into the fuel and nobody knows.
Our president promised less lobbying in government. That's a crazy dream when government spending grows. When the Feds dangle more cash, more lobbyists swarm. They contribute to their favorite candidates, host more fundraisers, "educational seminars" and trips.
So the grocery lobby fights the EPA on this because the price of its corn flakes and taco shells go up when corn is diverted to nonfood use. The oil lobby is against 15% ethanol for obvious reasons. The automakers are cautiously against it (probably muted since the Feds own two of them now). Maybe trashing a few of those older engines with higher ethanol blends could boost their new car sales. The ADM lobby promotes ethanol for obvious reasons. Each lobbying group's position is filled with high-minded words and concerns for humanity. Every lobbyist's clients will make more money if they win.
My grandfather was an Iowa corn farmer. My father was an Iowa corn farmer. I worked those fields and inherited them. But I sold that land decades ago, so have little more than a detached interest.
Our president promised less lobbying in government. That's a crazy dream when government spending grows. When the Feds dangle more cash, more lobbyists swarm. They contribute to their favorite candidates, host more fundraisers, "educational seminars" and trips.
So the grocery lobby fights the EPA on this because the price of its corn flakes and taco shells go up when corn is diverted to nonfood use. The oil lobby is against 15% ethanol for obvious reasons. The automakers are cautiously against it (probably muted since the Feds own two of them now). Maybe trashing a few of those older engines with higher ethanol blends could boost their new car sales. The ADM lobby promotes ethanol for obvious reasons. Each lobbying group's position is filled with high-minded words and concerns for humanity. Every lobbyist's clients will make more money if they win.
My grandfather was an Iowa corn farmer. My father was an Iowa corn farmer. I worked those fields and inherited them. But I sold that land decades ago, so have little more than a detached interest.
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Biofuels are a wide range of fuels which are in some way derived from biomass.
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