The expanded use of corn-based ethanol has pushed up food prices, and the expansion has yet to fully run its course. The ethanol industry is urging the government to increase the share of ethanol required in gasoline to 15 percent, up from 10 percent.
Though meant to reduce U.S. dependence on imported oil, the plan would require Americans to spend more at the gas pump and on groceries. And there's no great mystery about who will have to dig deepest for the money to pay for ethanol: poor working families.
Once heralded as a clean, renewable alternative to gasoline, ethanol has lost much of its luster amid questions about the financial and environmental costs of producing it.
Among the latest to scrutinize the ethanol industry is the Congressional Budget Office. From April 2007 to April 2008, it estimates, "the increased use of ethanol accounted for about 10 percent to 15 percent of the rise in food prices."
Of the record 93 million acres of corn planted in the United States in 2007, about 20 percent went to ethanol. Since most of the rest is used to feed animals, the prices of beef, milk, poultry, and pork are all affected by increases in the cost of corn.
Americans spend an estimated $1.1 trillion a year on food. In 2007, the ethanol subsidy cost families between $5.5 billion and $8.8 billion in higher grocery prices. The subsidy includes a mandate that guarantees a market for ethanol, a tax credit for every gallon produced, and import tariffs to keep out Brazilian ethanol.
Another study, done for the Grocery Manufacturers Association, warns that fuel blends with 12 to 15 percent ethanol would increase the land needed to grow corn to at least 100 million acres by 2015. Such an increase could force farmers to take land away from other crops, raising prices for all sorts of grains.
In addition to further raising the cost of food, ethanol has other drawbacks. One major concern is whether a higher-ethanol blend would hurt fuel lines and other parts of car engines. Increased production of corn-based ethanol also drains valuable groundwater supplies, requires more fertilizer and pesticide, exacerbates soil erosion, and emits more global-warming gases.
Nor should anyone be misled into thinking that increasing the government mandate will have much effect on foreign-oil dependence. The high energy requirements of production, processing, and shipping mean ethanol isn't all that much better for energy security than gasoline. And many drivers have reported a loss in fuel economy when using a 10 percent ethanol blend.
The best way to achieve energy security is through improvements in energy technologies and a balanced mix of traditional and alternative sources, along with conservation and efficiency. Spending huge sums on corn-based ethanol detracts from these worthwhile efforts. Instead of hobbling the economy with costly new mandates and subsidies for ethanol, we should pursue a balanced energy strategy that helps our economy and consumers alike.