Wednesday, August 15, 2007

The New York Times warns that ethanol subsidies may have created a "tragic moment"

This past Friday, The New York Times published an editorial harshly criticizing ethanol subsidies. ("The Farmer's Nightmare," The New York Times (August 10, 2007)) The editorial warned: "American farming is poised on the brink of true industrialization, creating a landscape driven by energy production...What we are witnessing is the beginning of the tragic moment in which the ownership of America's farmland passes from the farmer to the industrial giants of energy and agricultural production." In January, The Wall Street Journal published a similarly harsh editorial criticizing ethanol subsidies. ("Very, Very Big Corn," The Wall Street Journal (January 27, 2007))

These editorials identified the following negative impacts of ethanol subsidies:

1. Ethanol subsidies are harming U.S. consumers by increasing the prices of corn and corn-containing products (e.g. cornflakes).

2. Ethanol subsidies are harming foreign consumers. For example, in Mexico the price of corn tortillas, a staple, increased by roughly 30% during the final months of 2006.

3. Ethanol subsidies are harming U.S. livestock producers, who purchase corn for feed. High feed prices are making U.S. livestock producers less competitive internationally.

4. Ethanol subsidies are driving farmers out of business by helping big farmers and outside investors outcompete small farmers.

5. By increasing land prices, ethanol subsidies are preventing young farmers from purchasing farmland.

6. Ethanol subsidies are decreasing crop diversity.

7. Ethanol subsidies are artificially creating incentives for persons to farm land once set aside for conservation purposes.

8. Ethanol subsidies are increasing smog production.

9. Ethanol subsidies are causing consumers to purchase a fuel that they would never purchase absent whopping 51-cent per gallon subsidies.

10. Ethanol subsidies are causing producers to produce a fuel that they would never produce absent artificially increased consumer demand. Ethanol may require more energy to produce than ethanol generates (the scientific community is divided). Furthermore, ethanol is less efficient than ordinary gas; that is, more ethanol-containing gas is needed to drive the same number of miles as with ordinary gas.

My hope is that the American people will pay attention to critiques such as these and force politicians to engage in a better-informed discussion about ethanol subsidies.


Anonymous Alan Braun said...

Excellent post. The $0.51 per gallon subsidy did what it was supposed to do: stimulate investment in Ethanol. It succeeded. Now we're seeing the other side of the coin, and it is not a green dream.

I agree: STOP the ethanol subsidy NOW.

3/11/2008 8:48 PM  
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