Congress Picks a Loser

Posted: Apr 15, 2008 10:50 AM
Congress Picks a Loser

Congress doesn’t trust consumers to make the right decision when it comes to selecting the right source of energy. Congress knows better. That’s why legislation out of Capitol Hill is all about weaning us off oil and putting us directly on a “renewable energy” diet.

Witness the energy tax bill the House passed in February that slaps $18 billion in taxes on oil production to fund wind, solar, biofuels, and other “alternative” sources. Witness the new energy law passed in December mandating that Americans increase the use of ethanol and other biofuels at the pump to 36 billion gallons by 2022, up from 7 billion gallons required now. And witness the new farm bill that gives corn growers $10.5 billion in subsidies over the next five years, no matter how fast the price of corn rises—which, incidentally, has gone from $3.50 a bushel to a record $5.50 over the past three months.

The problem is that Congress, unlike consumers who make decisions based on price and availability rather than political pressures from entrenched farm interest groups, gets it egregiously – and damagingly – wrong. Even with oil topping $109 a barrel, it is still relatively abundant. As the U.S. Geological Survey reports, there are 3 trillion billion barrels of oil reserves still available globally. For perspective, since the first automobile rolled off the assembly line, we’ve consumed only one trillion barrels.

Conversely, ethanol and other biofuels are extremely limited resources requiring enormous amounts of water, energy, and land otherwise used for growing food. The new energy law’s requirement that Americans use 15 billion gallons of corn for fuel by 2015 – that doesn’t include the other 21 billion gallons to come from non-food sources like switchgrass and corn husks – will consume an astounding 30 million acres of cropland. That means unless the mandates are repealed, more than a third of our corn crops will be diverted from food to fuel in just seven years.

U.S. policies forcing biofuel usage already are creating food shortages in third world countries, elevating food prices to historic levels. The New York Times, a longtime supporter of biofuels, now reports, “The world’s food situation is bleak, and shortsighted policies in the United States and other wealthy countries – which are diverting crops to environmentally dubious biofuels – bear much of the blame.”

This month, the UN’s World Food Programme and U.S.’s Food for Peace, the world’s largest food aid organizations, report gaping budget shortfalls resulting from soaring food prices. Declaring we are on the cusp of a food shortage crisis, the groups are urging the U.S. and other responsible nations to provide more aid to fend off world starvation in poor countries. Meanwhile, as the director of the Overseas Development Institute, a London think tank on humanitarian issues, comments, “U.S. and British farmers are laughing all the way to the bank.”

Here at home, market prices for food are surging too, adding to growing concerns that “agflation” will disproportionately hurt low-income families. The U.S. Department of Agriculture predicts “record current year prices for wheat, corn, and soybeans,” a fallout from “continued expansion in biofuels production.” Overall, consumer food prices have far outstripped inflation. Eggs are up 35 percent, dairy products 13 percent, fruits and vegetables 6 percent, cereals 5.5 percent.

Meat processors that rely on corn and grains for feedstock are also hurting. This month, the biggest U.S. poultry producer, Pilgrim’s Pride, announced it was closing a processing complex and almost half of its distribution plants in response to “the crisis facing the U.S. chicken industry from soaring feed-ingredient costs resulting from corn-based ethanol production.”

For what? To reduce greenhouse gas emissions? Bad choice. Ethanol and other biofuels contribute far more greenhouse gas emissions than regular gasoline, worsening rather than alleviating any possible threat of climate change.

Two independent studies in the journal Science report that the clearing of forests, grasslands, and other ecosystems throughout the world to grow corn, soybean, and other food-for-fuels will double greenhouse emissions over the next 30 years. Because plants and soil hold enormous quantities of carbon, destroying existing plants and tilling the soil releases the stored carbon.

Until now, the effect of land conversions was a mere footnote in the calculation. But “when you take this into account,” explains one of the study’s lead researchers Timothy Searchinger of Princeton University, “most of the biofuel that people are using or planning to use would probably increase greenhouse gases substantially.” Furthermore, he adds: “It is major. The comparison with fossil fuels is going to be adverse for virtually all biofuels on cropland.”

The second study by scientists from the University of Minnesota and The Nature Conservancy estimate that in the United States, converting the Central grasslands into corn ethanol emits so much carbon dioxide, it would take almost a century—93 years—to offset the damage.

Even switchgrass, touted as the future of biofuels because it is abundant, easy to grow, and doesn’t compete as a food source, would release stored carbon and increase greenhouse emissions an estimated 50 percent.

If not to reduce carbon emissions, then for what? To reduce dependency on foreign oil? Wrong choice again. The punitive tax bill now before the Senate taxes the nation’s largest oil companies while letting foreign producers off scott-free. It doesn’t take an energy expert to know punishing U.S. oil production will discourage investment in domestic supplies and increase our dependence on foreign oil.

In short, Washington’s distorted policies forcing biofuel usage on Americans are hurting consumers by driving up food and gas prices to historic levels. Fuel for thought: unless we reverse course, Congress’ bad choices could lead to world starvation, all the while increasing our dependence on foreign oil and furthering carbon emissions.