Hungry for Fuel

Rich Tucker

8/16/2012 12:01:00 AM - Rich Tucker

In a classic Bugs Bunny cartoon, a local widow who’s inherited $50 million feels a bit chilly, so she tosses wads of greenbacks into a fireplace. After all, she now has “money to burn.”

It makes a universal point: people don’t burn valuable things. Thus, it must be true that, even in this age of obesity, Americans don’t consider food to be valuable.

Wait -- how’s that possible? After all, we need food to live.

True. But it’s also federal policy that we must burn almost half of our nation’s annual corn crop.

“Fuel refiners are required to blend 13.2 billion gallons of corn alcohol into their petroleum-based fuels this year or face fines, thanks to the Energy Independence and Security Act of 2007, which included ethanol in its Renewable Fuel Standard,” The Washington Times noted recently. “The ethanol requirement forces fuel refiners to buy nearly 40 percent of the corn harvest to meet their mandates, meaning fewer bushels are available for animal feed and human consumption.”

This is especially a problem this year. “Corn prices -- which have already surged about 50 percent in the past two months -- could go significantly higher if current trends hold up, and the effects might be felt throughout the economy,” CNBC reports. “Price momentum indicates corn could rise at least 21 percent over the next six months, putting $9.50 a bushel or even higher into play, according to a model used by the American Restaurant Association.”

And there’s no help in sight. “No matter how much of the U.S. corn crop is ruined by drought, no matter how high corn prices get, no matter how many people in developing countries are imperiled, the RFS requires that billions of bushels of corn be used to fuel cars rather than feed livestock and people,” Marlo Lewis explains. And the amount we’ll burn instead of eating is only going to climb in the years ahead. Federal policy requirements for ethanol use climb from some 4 billion gallons in 2006 to about 15 billion gallons in 2015.

For better or for worse, corn is in most things we eat.

“It’s not merely the feed that the steers and the chickens and the pigs and the turkeys ate; it’s not just the source of the flour and the oil and the leavenings, the glycerides and coloring in the processed foods; it’s not just sweetening the soft drinks or lending a shine to the magazine cover over by the checkout,” journalist Michael Pollan writes. “There are some 45,000 items in the average American supermarket, and more than a quarter of them contain corn.” That makes corn perhaps most important food item in the world.

Some lawmakers are catching on.

They’re encouraging the federal government to relax its RFS standards and allow people to eat, rather than burn, corn. “As the worst drought in more than 50 years withers the Midwest corn crop, 25 U.S. senators urged the Environmental Protection Agency to cut the mandate that requires fuel blenders to add grain-based ethanol to gasoline,” Reuters reported on Aug. 7. That would be a step in the right direction.

It would be better to simply repeal the mandate altogether and allow ethanol to compete on a level playing field with old-fashioned gasoline. Less corn in our fuel would leave more available for people and animals to eat. As a bonus, fuel efficiency for American drivers would increase, because ethanol has a third less energy than gasoline.

Ethanol, because it’s popular in corn-growing states such as Iowa and Nebraska, was once thought to be politically untouchable. But at the end of last year lawmakers finally scrapped a tax subsidy that paid refiners to blend ethanol into gasoline. The subsidy had cost Americans some $20 billion over three decades. “Fiscal conservatives joined liberal environmentalists to kill it, with help from a diverse coalition of outside groups,” The New York Times explained. And, as politicians must have noted by now, the world didn’t end.

Free-market advocates have been arguing for years that the government should stop picking winners and losers in the food and fuel industries. Now, it should finally be possible to build a coalition to kill the ethanol RFS. The movement could start with people who eat. If it needs to, it should be able to build from there.