The Unintended Consequences of Ethanol

President Bush signed a major energy bill Wednesday that calls for production of 15 billion gallons a year of corn-based ethanol fuel and 21 billion gallons of "advanced biofuels" from other raw materials. The unintended consequences of ethanol are explained in the upcoming issue of MIT's Technology Review.

More alarming, the boom in ethanol production is driving up the price of food. 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. The international Organization for Economic Coöperation and Development (OECD) recently warned that the "rapid growth of the biofuels industry" could bring about fundamental shifts in agricultural markets worldwide and could even "cause food shortages."

Add this to the fact that ethanol is highly inefficient and does not provide a net energy gain and you have the makings of a fiasco that can do real economic damage. The forces that drive ethanol are a perfect storm of half baked ideas and misguided good intentions; environmentalism, global warming nonsense, Iowa politics, and energy independence. Ethanol is a mirage that finds appeal across the political spectrum. As far as I am aware, John McCain is the only Presidential candidate taking a stand against government subsidies for ethanol.

See the MIT article here.