Subsidies and Mandates Will Not Lower Energy Costs

The New York Post recently wrote, the “EPA sided with the ethanol cheerleaders by announcing that it will allow the amount of ethanol in automotive fuel to rise by some 50 percent, from the current 10 percent blend to a 15 percent level.” Adding that such a move “will have big implications for your weekly grocery bill.” James Wilson of Downsize DC reported in 2008 “when farmers use their land to grow crops for ethanol production, instead of food, the food supply drops and the price of food rises… A University of Iowa study indicates that ethanol production increased the average food bill by about $47 over the last six months of 2007.” Just imagine the how much food prices will go up when more ethanol gets added to your fuel. The NY Post also writes that ethanol “has been backed by hundreds of billions in investment and subsidy dollars.” However, they don’t say how many billions of dollars have been “invested” using tax-payer funding. Wilson states “that every $1 of profit earned by ADM (Archer Daniels Midland – one of the major produces of ethanol) from its ethanol operation has cost taxpayers $30.“

The added cost & government subsidies is only 1 part of the problem with ethanol. Downsize DC reports, “Ethanol consumes more energy than it produces. A study by Cornell and UC Berkeley found that corn converted to ethanol consumes 29% more energy than it creates. Most of these energy losses come from the burning of extra fossil fuels. Energy losses from other sources of ethanol, such as switch grass (45%) and wood (57%) are even worse.”

Other problems with ethanol include: the fact that “ethanol fires require special materials and training to extinguish.“ Meaning that if your car catches fire, your chances of surviving are diminished.
And, the myth that ethanol will lead to energy independence. “Even if we used ALL the corn produced in the U.S. to make ethanol, and NONE of it for food, U.S. gasoline consumption would drop by only about 12%. This wouldn’t even make us independent of the oil we import from the Middle East (which is about 14% of our total consumption), let alone the oil we import from other parts of the globe,“ explains Wilson.

The solution to any “energy problem” is not to add government subsidies and/or mandates, but to remove the subsidies and mandates and allow a truly free market system of competing and complimentary energy sources such as wind, solar, hydro-electric, geothermal and the fossil fuels (petroleum based fuels, coal & natural gas). By allowing a truly free market to exist, energy prices will drop as companies find ways to more efficiently deliver their product/service. Food prices will also drop because farmers will no longer be encouraged to take food out of the food supply to be used as fuel which will have an added benefit of making it cheaper for the food to be delivered to your local grocer.