Econ 101....When a govt wants more of something for the good of society it subsidies it......
...Govt subsidies for cheap Food has kept the USA consumer food costs 15% plus under world costs for decades........
do the math: 15% X 30,000 Ave income X 300 million people........1.35 Trillion.......at a cost of 25 billion in subsides to farmers......consider it welfare for the American consumer......it just happens to pass thru the farmers fingers for a short time.
Ethanol maybe adds 5 cents to a box of cornflakes....yets saves 50 cents a gallon at the pump......
Who spends $30,000 per year on food? You need to revisit that math.
Better try Reading Comprehension 101, Auto Maintenance 101, Math 101, and “How Not To Be Bamboozled 101”, first.
Food cost as a % of income is WELL under 15% for the average U.S. family. Even a family of four with a family income of $30,000/yr can do better than that. But, let’s say they are not so smart, and they do spend 15% of the family income for the family’s food, or $1125 per family member, per year. Now, if U.S. food costs are 15% under world costs*, then $1125 x 0.15 = $168.75 per person. $168.75 times 300E6 = $50.6 billion. Still seems like a good deal, right?
However, US food costs are not low just because of subsidies. We have an exceptionally efficient farming and food distribution system, among a host of other factors. Almost certainly the subsidies are not the most important factor, but, even if they are 1/2 of the reason food prices in the U.S. are low, now you are down to roughly $25 billion in lower food costs... Hmmm....
I also question the “15% lower than world food costs” figure? How is THAT arrived at? Most of the world’s population is in the 3rd world. In such areas, food costs for basic staples “at the store” or “at the local market” or “at the dinner table” - however you want to look at it, in an absolute sense, are lower, often much lower, than here in the U.S. I have direct experience with this, overseas, and I’ll bet a lot of other FReepers have, too.
Well, never mind that. There are substantial costs associated with ethanol, too. For one, most cars are not engineered to properly take advantage of it, so there is a mileage penalty. (This has improved somewhat, but without more drastic changes to engine design, it looks unlikely to improve much more. Besides, we are talking about current analysis, not future hopes.)
Worse, ethanol causes higher auto maintenance costs. Some of this has been addressed, but not all. And a LOT of cars that weren’t really made to handle ethanol are still on the road. Any decent mechanic can tell you about the increased problems. Just the worsened problems with varnish in the fuel system are a major hassle. Pro-ethanol sites say this is not a problem, but that is NOT my experience. I do some of my own auto work - one preventive measure that I do especially on my wife’s minivan is to remove and clean or replace BOTH fuel filters every year, or every 10,000 miles if that’s sooner, or before any significant trip. Every time I pull out that in-tank filter, for the last several years, I see at least SOME evidence of gummy accumulation on it. We use only major brand name gasolines, too. Before ethanol, this was rarely a problem in any of our vehicles. Now I don’t know what your mechanic charges, but I have a buddy up near Chicago who is top notch competent, so I go over 300 miles each way and pay him his shop rate of $94 per hour to have him work on my vehicles when I can’t do it myself. Your costs may be lower, but I find that paying a top notch mechanic is well worth it, in the long run. Bottom line: For an average family of 4, with 2 vehicles, the increased maintenance on those babies is likely going to eat into any money saved on fuel, pretty quickly. Of course you could buy a newer car with less maintenance problems - I’m sure the lower maintenance costs will help finance the car payments...
Worst of all, your analysis doesn’t address what else the money spent on ethanol subsidies could have been used for. How about using it to reduce the National Debt, the interest on which is going to “kill” us, economically, one of these days? How about using it as an incentive to vastly expand development of domestic oil sources? What would that do for the price of fuel? (Oops, I forgot, current Gov’t policy is just the opposite.) If you really want to go green, why not get rid of the ethanol subsidies and burn the ethanol on site to produce electricity during times of peak demand? Or use the subsidy money instead to fund the programs that help people acquire energy efficient appliances or improve energy savings in their homes. That’s something with REAL payback, long term.
Last, corn is not the inexpensive item it was a few years ago. There is a growing shortage of food, worldwide. China’s consumption in particular is skyrocketing. That 5 cents on a box of Cornflakes is no longer 5 cents. And perhaps more to the point, even a cost increase of 5 cents on a box of cereal, while not very significant here, means that somewhere, like some of the places I’ve been, more children are starving to death.
I will admit, there was a time when I supported ethanol subsidies. One learns as you go along...
Coupe of other things to factor.
1) Goobermint is shorting itself tax revenues by using subsidies to artificially hold food prices down.
2) What would the price of food really be if there were no government meddling at all? Thinking of all the fertile ground that grows weeds because the feds pay farmers to idle it, or limit dairy production, etc.