Skip to comments.Ethanol Policy Not Producing Desired Results
Posted on 03/20/2012 12:46:17 PM PDT by Constitutionalist Conservative
The Energy Independence and Security Act of 2007 (EISA), which mandated a steep rise in domestic ethanol production, is causing unforeseen negative consequences for food prices while failing to live up to the desired gasoline results and other expectations, concludes a Texas A&M University research team headed by an economics professor who studies energy issues.
James M. Griffin, director of the Mosbacher Institute for Trade, Economics & Public Policy, which is part of Texas A&Ms Bush School of Government and Public Service, and Mauricio Cifuentes Soto, a graduate student assisting him, say in their report that the goal of EISA was to cut greenhouse gas emissions and to ease dependency on imported oil. Policymakers also thought the new blend of ethanol and conventional gasoline would cost motorists less, they note.
EISA mandated ethanol production to grow from 4.9 billion gallons in 2006, to 36 billion by 2022, says Griffin, author of A Smart Energy Policy: An Economists Rx for Balancing Cheap, Clean, and Secure Energy. Today, at 14 billion gallons, were not even halfway there and the unintended consequences of the policy, especially those influencing world food prices, are negative and far outweigh the positives.
With the best of intentions, he observes, lawmakers believed the policy would have a positive effect by lowering prices at the pump. Moreover, since corn plants absorb CO2 from the atmosphere, greenhouse gas emissions would fall significantly, and the U.S. would build energy security as domestic ethanol replaced oil imports from the Middle East.
On the positive side, the researchers point out that after adjusting for ethanol BTU efficiency losses of 40 percent less compared to conventional gasoline, refining costs, taxes and subsidies, the net benefit of the ethanol policy is just about 2.2 cents per gallon or $24 per year for a typical household consuming 1100 gallons per year.
Additionally, using CO2 life-cycle estimates by the Argonne National Laboratory, the authors assert that, ethanol reduced U.S. and world greenhouse gas emission 0.42 percent of U.S. and 0.08 percent of world emissions.
Nevertheless, these benefits are minuscule when put in perspective. Corn-based ethanol has done little to reduce the nations carbon footprint, Griffin adds. In contrast, the policys unintended consequences for food prices raise grave economic and ethical issues.
The Texas A&M researchers also traced an increase in corn and grain prices to ethanol production. They refer to the United Nations FAO Food Price Index which shows that between Jan. 2007 and Sept. 2011, after adjusting for inflation, corn prices increased by 68 percent, cereals by 69 percent and dairy products by 46 percent.
One study (Hayes et al, 2009) the researchers cite quantifies how a $1 per bushel increase in corn prices impacts a wide variety of food products. The study shows, for example, that between 2005 and 2011 corn prices rose by $5 per bushel, beef rose 18.5 percent, pork 16 percent, poultry 17.5 percent, eggs 27.5 percent, milk 10.5 percent, cheese 9 percent, sugar and sweets 3.5 percent.
The researchers claim that not all these price increases are due to U.S. ethanol policies. However, even if only one-fourth of this additional expenditure is attributable to ethanol, this would imply a loss to American consumers of $40 billion over the last 4 years.
Even though these increased food prices might not look so significant, the worlds poor disproportionately share the burden of these policies because a large portion of their income is devoted to food alone, they add. According to the U.N., rising food prices plunged nearly 70 million people into extreme poverty in 2010-2011.
Finally, in regards to energy security, the authors claim that the benefits of ethanol policy are largely elusory. The fact that in 2011 ethanol displaced 5.6 percent of imported petroleum is irrelevant because the world oil market and its effects are global. Even though the U.S. imports no oil from Iran, for example, a disruption of Iranian supplies would trigger world-wide increases in all oil prices even domestically.
Griffin and Cifuentes conclude that, instead of marching blindly ahead to EISAs 2022 mandated production target of 36 billion gallons, the ethanol policy should be reassessed.
To be sure, we should continue to support R&D for advanced biofuels such as cellulosic ethanol, Griffin says. In the interim, we should dismantle the ethanol mandates and trust markets to sort out the proper mix of ethanol in gasoline.
For more on the study, go here.
I hate ethanol!
It links food prices to energy prices and it just plain sucks.
My yard machines have been in the shop for going on 3 weeks, gunked up with ethanol
I put stabil in them.
How is ethanol good?
There are also the Iowa Caucuses pressuring every Presidential contender to suck up to King Corn.
Why are we burning our food?
The author fails to mention that the price of corn has dropped from 2011 highs of $8.50 per bushel to a near term price of $6.47 and to $5.88 for 2012 new crop delivery.
—as I have bored posters with in the past, as I spend some time in corn country during both the planting and the harvesting of corn, I have awaited in vain for any evidence that growers of corn are converting from diesel to ethanol in any of the pertinent equipment-—
Wouldn't that be "illusory"?
Don’t you know, food and fuel are supposed to be nearly free.
Gee,.... yah think? This result was predicted by even those of us who aren't "energy specialists".
Both. Elusory = elusive, illosory = deluded.
Conversion of an Otto cycle (4 stroke), like a gasoline engine, to alcohol, is somewhat more practical, just a matter of timing mostly.
Now, you could convert a Diesel cycle, or Diesel, to burn soy bean oil, or other vegetable oil. Not much conversion required, maybe some extra filtering and possibly a fuel pump change in some brands of engine. I don't know if the farmers do any of that or not. The difference is that the veggie Diesel fuel is energy wise equivalent to the petro Diesel fuel, while alcohol doesn't have near the energy content of pure gasoline.
I know a couple of people who have burned veggie Diesel, and not commerical Bio-Diesel either, in their trucks. One guy had fuel pump issues, in a Dodge truck IIRC.
To be clear, i don’t mean burn the soy or corn oil itself, but rather a Diesel fuel made from them. People have burned used oil from McDonalds. Makes the exhaust smell like French Fries. :)
In other words, the benefits are eluding them, they can't be found. Right word.
Well, one thing; the small two-stroke engine just was not made to run on ethanol. At least, the fuel-system components are very succeptible to complete disintergration with only limited exposure to ethanol, and none of the additives prevent that, either. They may slow it but won’t stop it. Outboards that I have had did not suffer so much, but chain saws and weed eaters you have to dump the fuel out of and run ‘em dry, and still you get expensive damages in very short time. I hate ethanol. It is absolutely not necessary.
“Makes the exhaust smell like French Fries.:)”
--as an aside to this, have a friend who sold equipment in Wisconsin for years. When calling on an ethanol plant, he commented that some of the product must be used in the distillation heating. Response was "hell no--this stuff is too expensive--we use natural gas"--