BY MICHAEL R. FOX, PHD – If ever there was a question as to whether production of corn-based ethanol is forcing consumers to dig deeper into their wallets to pay for food and fuel, it was dispelled by a government report showing that corn prices have jumped 89% in the past year.
The U.S. Department of Agriculture reported recently that a record 4.95 billion bushels will be used this year to make ethanol. That’s about one-third of the U.S. corn crop. Because Congress approved mandates three years ago to boost its production and use, ethanol’s share of the crop is expected to grow, resulting in less corn available for food.
Today we see the results of the same complacency that caused the energy and economic debacle in the 1990s, using a flawed policy to create a market for alternative energy, while restricting production of domestic oil and natural gas resources.
Thanks to politically-driven mandates requiring the use of biofuels, the production of ethanol is on track to reach 36 billion gallons by 2017, up from 6 billion gallons in 2007. Saying it needs to comply with the mandates, the Environmental Protection Agency recently approved a blend of 15% ethanol mixed with gasoline, up from the 10% standard that’s in effect in much of the country.
Government backing of ethanol has led to a growing sense of uneasiness. If ethanol has an assured market due to the mandates, why then is the government continuing to subsidize its production? Ethanol receives a federal tax credit of 45 cents per gallon, and a tariff of 54 cents a gallon on imported ethanol. The tariff effectively keeps out lower-cost ethanol from Brazil. And the tax credit is costing taxpayers about $6 billion this year.
We could solve several problems at once if Congress dropped the subsidy for ethanol. Tailpipe emissions of smog-forming nitrogen oxides and other pollutants resulting from ethanol use would be lower. There would be less risk of damage to catalytic converters on cars. And more of the U.S. corn crop would be used for food, not fuel.
And talk about a growing sense of uneasiness. There are other engineering flaws with using ethanol as a fuel for cars. One flaw is that in most cases it requires more energy (usually petroleum) to make a gallon of ethanol than is in the gallon of ethanol. That is to say in most cases ethanol is a net energy consumer, not a net source of energy. According to Cornell professor David Pimentel it takes 131,000 BTUs to make one gallon of ethanol. One gallon of ethanol has an energy value of only 77,000 BTUs. (http://healthandenergy.com/ethanol.htm)!!
A second flaw is that there is only 2/3 the energy in a gallon of ethanol as is in a gallon of gasoline. There is only 77,000 Btu/gal for ethanol vs. 117,000 Btu/gal for gasoline (http://healthandenergy.com/ethanol.htm).
We pay a dear price for such dangerous energy silliness. On Monday we are told to buy energy efficient cars complying with increased Corporate Average Fuel Economy (CAFÉ) standards. On Tuesday we see increases in ethanol content to 15%, thus lowering even more the miles per gallon from this horrendous fuel. To compound the energy silliness the consumers are heavily subsidizing the production of the entire charade, both in the manufacture of the ethanol and in the increased price for ethanol at the pumps.
Despite ethanol’s increased use, the demand for gasoline, diesel and other petroleum products has not declined. In fact, the oil industry is hard-pressed to keep up with the need for oil, which is projected to remain at the same level through 2035 or longer. Although there is an estimated 116 billion barrels of oil yet to be tapped on federal areas in the United States, production is hampered by regulatory and taxation policies that are driving energy companies abroad. A case in point: oil companies have moved some of their rigs to foreign oil fields in the wake of the Administration’s decision to ban drilling in new areas off the Atlantic Coast and in the Eastern Gulf of Mexico. These counter-productive policies are costing jobs and revenue and harming U.S. security.
The rationale for increased use of ethanol is that it would reduce U.S. dependence on oil imports from the politically volatile Middle East. But so far the savings have been small. And restrictions on domestic drilling, together with the Administration’s threat of higher taxes on oil companies, are having a chilling effect on investment in U.S. oil production. The upshot is that Americans are paying nearly $1 billion a day for imported oil, of which 20% still comes from the Middle East.
The shame of it is there are sizable oil and natural gas resources in federal offshore areas that are closed to energy production. In addition, some places on land are still off-limits. One such area is the Arctic National Wildlife Refuge, which holds an estimated 15 billion barrels of oil. Opening up these prime areas would do more to strengthen U.S. energy security than foolishly relying on heavily-subsidized ethanol.