Ethanol Nonsense

In a previous posting we pointed out that most studies show that ethanol is a net energy loser. That is, it takes more energy for growing the corn (operating farm equipment, for fertilizers, harvesting, etc.) and distilling the ethanol than you can get from burning the ethanol. Even studies by the U.S. Dept. of Energy and the U.S. Dept. of Agriculture have come to this conclusion. Not surprisingly, this is disputed by the ethanol industry and its champions. However, Howard Hayden, Professor Emeritus of Physics from the University of Connecticut, made calculations using the most favorable figures on the planet for corn yield, operating farm equipment, distillation, etc.. He found that even with the most optimistic values for any and all aspects of ethanol production, the net energy gain from one acre of corn would be sufficient to continuously light one 60-watt light bulb. (See our posting of August 10, 2005, under ARCHIVES).

But for the moment, let’s leave aside the issue of whether or not ethanol is a net energy loser. Instead, let’s focus on how much ethanol, whether energy efficient or not, could possibly substitute for our imports of petroleum. The ethanol advocates are constantly prattling about how ethanol could reduce our dependence on foreign oil, and politicians use this as an argument for handing out ethanol subsidies and mandating ethanol at the gas pump. So how much could ethanol possibly reduce our oil imports, regardless of the cost to produce the ethanol? Get ready for a surprise.

2004 was a record year for U.S. production of both corn and soybeans. If the entire record corn crop was converted to ethanol and the entire soybean crop was converted to biodiesel fuel, these two alternative fuels would equal only 12 days of U.S. petroleum consumption! (We thank Ted Lofstrom of Ellis Associates for his calculations.)

Of course, it is impossible that our entire corn or soybean crop could be used for fuels since virtually the entire harvests are taken up by other uses, for which there are not readily available alternatives. Devoting all our corn to ethanol would mean not just the elimination of corn flakes, popcorn, and canned and frozen corn from the nation’s supermarkets. The Cocoa Cola Company makes 1.8 BILLION cases of Coke in the U.S. annually with high fructose corn syrup. That’s just for Coke; it doesn’t include Pepsi and all the other soft drink manufacturers, nor does it include other food producers who also use high fructose corn syrup in their products. And we haven’t even mentioned what is by far the largest use of corn: livestock feed. What could possibly substitute for corn in feeding the nations’ cattle and hogs? And what do you think would happen to the prices of beef and bacon? Obviously, therefore, the most extensive production of ethanol and biodiesel that could reasonably be expected cannot possibly provide anywhere close to even the 12 days of petroleum consumption cited above. It cannot possibly be in our interest to promote the substitution of these alternative fuels when their effect on imports is trivial and the cost will include a chain of distortions, higher prices, and shortages elsewhere in the economy. Here is just one more example of how government intervention in economic matters is less beneficial and more costly than the free-market alternative. The distribution of material and financial resources and human labor that results from free choices in the marketplace is, as always, the best solution. Yet National Public Radio reported last week that federal subsidies for ethanol are now running $3 billion annually.

Furthermore, despite claims that ethanol is good for the environment, Ed Crozier, a retired manager of the U.S. Fish and Wildlife Service, says that ethanol and biodiesel subsidies “could encourage such intensive farming that all Great Plains wildlife will be threatened. Energy farming—where ‘dedicated crops’ are grown solely to produce energy—will encourage the cultivation of even marginal land where other crop production hasn’t been profitable. That will leave no land for wildlife.”