News Coverage
Ethanol Rush May Be Doing More Harm Than Good
Published June 23, 2008
Are those lawmakers in Washington and Oregon who fought successfully for ethanol mandates in the two states having second thoughts? They ought to be. A growing number of officials and industry leaders in other states are rethinking the popular wisdom that led to laws aimed at speeding the development of ethanol and other biofuels.
The unintended consequences of so-called “food-to-fuel” mandates are mounting. On Thursday, leaders in agricultural economics, the environmental movement and the food industry urged the U.S. Environmental Protection Agency to take a second look at biofuels mandates in light of rising cost of food and gasoline.
The diversion of corn to fuel is having a dramatic impact on food prices, straining the family budgets of working Americans and sparking food riots in Haiti and other impoverished parts of the world. It’s leading to higher feed costs for the cattle and poultry industries. It’s driving up the price of eggs, milk, bread and other staples. Mandating more ethanol clearly is doing nothing to hold down gasoline prices, which are climbing toward $5 per gallon in many parts of the country.
Additionally, there is cause for concern about the mandates' effect on the environment. Richard Wiles, executive director of the Environmental Working Group, said, “This year’s 9 billion gallon (federal ethanol mandate) will cause an estimated 100 million tons of soil erosion and put 300,000 tons of nitrogen fertilizer into Midwestern waters. Thanks largely to the ethanol mandate and an excessively wet spring,” Wiles continued, “pollution levels in the Gulf of Mexico are expected to reach record levels, with a dead zone the size of Massachusetts.”
Consumers often pay a price when government tampers with the market-based economy in an effort to quickly advance one or another popular goal. That’s certainly been the case with biofuels mandates. Taxpayers have shelled out billions of dollars in subsidies to speed ethanol production over the years. Suspicions that they might not get value for their dollars arose at least half a dozen years ago. A 2002 Office of Management and Budget memo said President Bush’s Council of Economic Advisers and the Federal Trade Commission believed the federal ethanol mandate would prove costly for consumers and the government and would provide little environmental benefit.
It’s proved to be more costly than most could have imagined, and whatever environmental benefits the mandate brings may be canceled out by its harmful effects on the environment. Biofuels may have potential as an alternative energy source, but government would do well to let the market determine the pace of development.
