Ethanol a Costly Alternative Fuel

Living in the heart of corn country in Central Illinois doesn’t make me a populist when I write articles questioning the rationale of switching so much yield over to the production of ethanol. Around here, and much of the country, the maxims we hear are, “Ethanol is good for farmers and thus good for the economy" We also are subjected daily to the ads stating, “Ethanol reduces our being subjected to the whims and pressures of foreign oil."

Those little public relation sound bites are great. If only they were the truth.

Currently the latest Farm Bill, totaling almost $300 million in subsidies is flitting around the halls of the capital building waiting for debate. The Farm Bill is the latest chapter in a continuation of a system put into place in the 1930’s at a time when the American family farm was in jeopardy of disappearing from our economic landscape. Now 70 years later, that small family farm has indeed disappeared with only 1% of farmland estimated to be family farms. It doesn’t appear the subsidies worked if you consider that fact as being important.

Reports by various news agencies state that from 70 to 80% of the subsidies, which now aggregate into billions of dollars over the last few decades, are going to mega-corporations or billionaires who have purchased farmland in order to reap the real farmland crop which is cold cash.

Without question giants Archer Daniels Midland, Cargill and General Foods top the list of those receiving aid. Over 50 American billionaires are also shown as receiving farm subsidies with names on the list like Pritzker, Rockefeller, Five members of Wal-Mart founder Sam Walton’s family and the Hiltons just to name a few. Does anyone believe these individuals need tax dollars in order to survive?  

Still, with all the inherent flaws in the farm bill, they all take a back seat to what is happening with the ethanol production issue. Currently, in Central Illinois alone, half a dozen ethanol creating plants are in the process of being built. The plants convert corn into alcohol which is then blended into conventional gas. This gasohol product is then sold locally to reduce our dependence on Middle Eastern oil. The problem is that ethanol costs us more than importing foreign oil if you add all the costs to producing a gallon of ethanol.

First off, only 300 gallons of ethanol can be produced by an acre of corn so all the corn in America couldn’t produce enough fuel to move our autos and trucks along our highways. Secondly, the price of a bushel of corn has doubled in just over the last year causing meat and bread and other foods dependent on corn to rise in price by double digit percentages.

Third, the government has mandated almost $92 billion in subsidies to ethanol producers by the year 2012 to offset the fact the alcohol cannot be produced profitably without financial assistance. I personally asked an engineer of one of the plants going up if it would be built without the federal subsidies. He answered point blank, “No".

Perhaps all of this would still be palatable if ethanol could really help Americans not be nailed at the pump but in fact it won’t. Let’s look at another energy source that is totally home grown to prove American energy producers and suppliers are no better than those in OPEC.

Natural gas in this country is produced domestically. It is the number one source of heating fuel for our homes. It also is one of the most volatile commodities with numbers just two years ago showing how American corporations are just as profit driven as a sheik somewhere half way around the world. In 2007, an unusually warm winter caused our country to actually become conservationists of natural gas. Nationwide, we reduced consumption by an incredible 15% over the previous year. And what did it get us? Natural gas prices doubled over the previous year based on fears of a possible shortage. There was no shortage of course. The words “feared shortage" is jargon for American energy giants wanting to make more profit so they doubled the price of something since we weren’t using as much.

I respectfully submit that if by some stretch of the imagination, our country could become weaned of foreign oil; it wouldn’t save us a dime.

American energy companies have already shown us they have as little heart for the consumer as the dictator of Iran. Subsidies included or not.