The other energy scandal: ethanol
8/28/2002 12:00:00 AM - Michelle Malkin
Prosecutors snagged their first guilty plea in the Enron energy
scandal last week. Former executive Michael Kopper admitted to money
laundering and conspiracy to commit wire fraud. He has promised to forfeit
$12 million in illegal profits, which will be distributed to Enron victims.
Now, if only taxpayers could get some of their money back from a
far bigger corporate energy fraud that continues unabated in Washington:
The corn-based fuel is backed by both Democrats and Republicans,
who are hungry for contributions from agricultural conglomerate Archer
Daniels Midland (which owns 41 percent of U.S. ethanol production capacity)
and desperate for votes from the farm belt (where 98 percent of the nation's
ethanol plants are located). According to The Washington Post, Senate
Majority Leader Tom Daschle, D-S.D., supervised the writing of a section in
the Senate-passed energy bill requiring gasoline refiners to nearly triple
the use of ethanol by 2012.
After 2012, this anti-free market maneuver would guarantee
ethanol a growing fixed share of the country's fuel consumption every year,
no matter what consumers actually demand or what better methods of
reformulating gasoline come along.
House Speaker Dennis Hastert, R-Ill., and Minority Leader
Richard Gephardt, D-Mo., both from corn-fed states, support Daschle's
corporate welfare mandate, as does President Bush. "Ethanol is good for our
economy, it's good for our air," President Bush asserted earlier this week
during a swing through Iowa and South Dakota urging passage of the energy
That's not what a recent internal administration document
showed. A little-noticed memo from the Office of Management and Budget
reported in June that both Bush's own Council of Economic Advisers and the
Federal Trade Commission believe the ethanol mandate "is costly to both
consumers and the government and will provide little environmental benefit."
The panels concluded that a jump in ethanol consumption would
increase gasoline costs and might create fuel supply shortages on the East
and West coasts. Retrofitting refineries to produce an ethanol blend could
add at least 3 to 5 cents to a gallon of gas. In California, the mandate
could raise fuel costs by nearly a dime per gallon; in New York, it could
mean a de facto gas tax hike of more than 7 cents per gallon.
The ignored advice from Bush's experts is consistent with reams
of past findings on both the economic and scientific fraud that is ethanol.
Cornell University agricultural researcher David Pimentel, who
chaired a Department of Energy panel that investigated ethanol production
several years ago, published an analysis last year showing that about 70
percent more energy is required to produce ethanol than the energy that
actually is in ethanol. "Abusing our precious croplands to grow corn for an
energy-inefficient process that yields low-grade automobile fuel amounts to
unsustainable, subsidized food burning," Pimentel concluded.
As for the environmental "benefits," the National Academy of
Sciences concluded that ethanol had little impact in improving ozone air
quality. While ethanol can reduce carbon monoxide emissions, it also
increases emissions of volatile organic compounds and nitrous dioxide, the
most common precursors of smog.
When you add up all the targeted government subsidies for
ethanol, including federal price supports, a generous federal excise tax
exemption worth more than 5 cents a gallon at the pump, various tax credits,
and subsidized grain exports, the taxpayer tab amounts to more than $7
billion over the last 16 years. (And ethanol still
costs more than regular gasoline.) These government giveaways are on top of
the abominable $200 billion farm bill signed into law by President Bush,
which will pay farmers some $4 billion a year to grow more corn for
subsidized ethanol production.
It's not the small family farmers that reap the rewards. It's
the suits at ADM, whose every $1 of profits earned by ethanol operation is
estimated to cost taxpayers $30.
This corporate bilking of the public, and the Beltway collusion
that enables it, ought to be criminal. But instead of leading the ethanol
crooks away in handcuffs, Tom Daschle and President Bush kneel at their
feet -- waiting for the donations and votes to roll in while the corn goes
up in smoke.