Wednesday, April 23, 2008 by: Mike Adams
(NaturalNews) It was one of the dumbest “green” ideas ever proposed: Convert millions of acres of cropland into fields for growing ethanol from corn, then burn fossil fuels to harvest the ethanol, expending more energy to extract the fuel than you get from the fuel itself! Meanwhile, sit back and proclaim you’ve achieved a monumental green victory (President Bush, anyone?) all while unleashing a dangerous spike in global food prices that’s causing a ripple effect of food shortages and rationing around the world.
I think politicians need to spend less time bragging about their latest greenwashing schemes and more time studying The Law of Unintended Consequences. Because while growing fuel on cropland initially sounds like a great idea, any honest assessment of the total impact leads you to the inescapable conclusion that biofuels are largely a government-sponsored scam. With a few exceptions (see below), biofuels produce no net increase in energy output, and they cause food shortages while creating strong economic incentives for the destruction of the very rainforests we desperately need to stabilize the climate!
And now we’re just starting to see the early signs of the economic and social insanity that has been unleashed by this foolish pursuit of biofuels around the world: Food rationing in Sam’s Club stores in the U.S., rapidly-rising prices on bread, rice and corn, and price spikes at cafeterias and restaurants that depend on these staple ingredients. The price of rice has tripled globally, unleashing riots in Haiti and Bangladesh, and the United Nations has issued warnings that millions of people around the world now face starvation because they can’t afford to buy food. Americans are even starting to hoard food once again, after years of avoiding basic preparedness measures. (One benefit to all this, however, is that farmers are actually getting paid decent prices for their crops now, after years of operating on the verge of bankruptcy…)
Most biofuel efforts are a sham
Not all of these price spikes are due to the conversion of croplands to biofuel fields, but much of it is. As a result, it’s suddenly becoming obvious to nearly everyone that the pursuit of biofuels, as currently structured, is a grand greenwashing hoax. It doesn’t produce more fuel than it consumes, and it drives up food prices to boot!
Now, there are biofuels programs that really do work. The growing and harvesting of sugar cane in Brazil, for example, provides an 8-to-1 return on energy investment. But even that pursuit is tarnished by claims of unsafe work environments and massive environmental pollution (the sugar cane fields are burned before being harvested, a process that releases massive amounts of CO2 into the environment).
The only truly promising biofuels technology available today is based on microalgae. Feed CO2 to a vat of algae, and you can produce biofuels cheaply and responsibly, without destroying the environment. But these programs are only in experimental phases. Nobody is producing biofuels on a large scale from algae farms (not yet, anyway).
And that leaves the great American breadbasket: The corn and wheat fields. It is here that food is now being displaced by crops grown for biofuel processing. So where a farmer used to grow corn as a food source, he’s now growing it to sell to a biofuel processing facility which turns the corn into ethanol. Obviously, the laws of economics come into play here, meaning that every bushel of corn used for biofuels production means one less bushel of corn available for food. Factor in the laws of supply and demand, and you can see that the more crops we use for biofuels, the higher the prices will rise for food.
Politicians, it seems, have no understanding of economics. They need to study the basics as they are presented in Henry Hazlitt’s Book, Economics in One Lesson, which is a Libertarian-oriented guide that explains basic economics to anyone willing to learn. Economics is focused on the study of human behavior, or more precisely, consumer choice. Now, it seems, consumers are about to be faced with a choice they never wanted to have to make: Should I buy fuel, or food?
In other words: Do I want to drive my car, or do I want to eat?
You can have fuel or food, but not both
Under a biofuels-focused agricultural policy, the same limited resources (soil, sunlight and water, essentially) can be used for only one thing at a time. You can’t use the corn twice, obviously (you can’t eat the corn and process it for biofuels at the same time), so you’ve got to make a choice: Will you grow the corn for fuel, or for food?
The more you grow for fuel, of course, the less food you have, and that drives up food prices. But if you swing back the other way and grow more corn for food to ease food prices, the fuel prices go up. Trying to solve both problems at once is a bit like trying to pick up a wet watermelon seed with your fingers: It keeps slipping to the side.
One thing that has become abundantly clear in all this is that the era of cheap food and cheap fuel is over. I’ve written about this on NaturalNews, where I use the term “food bubble” to describe the most recent era of cheap food. As it turns out, cheap food is only made possible by cheap oil, and with oil now approaching $120 a barrel (a price that virtually no one thought possible just two years ago), food prices are simultaneously skyrocketing. (Modern farming practices use a lot of fossil fuel. So does transporting food across the country or around the world. Eat local, folks!)
Add to this the fact that global climate change is already underway, altering weather patterns and creating floods, droughts and other agricultural calamities, and you start to get the picture of just how bad things might get. That’s not even to mention the very serious problem of collapsing honeybee populations due to a mysterious condition called colony collapse disorder that’s devastating honeybee populations across North America right this minute. Honeybees, in case you didn’t know, pollinate plants that represent about 30% of all the calories consumed by Americans. That’s about one out of every three bites of your dinner, and it all depends on the “free” work performed by honeybees — bees who are apparently going on strike by refusing to keep working for us.
Prepare for mass global starvation
So, to repeat, the food bubble is now starting to implode. What does it all mean? It means that as these economic and climate realities unfold, our world is facing massive starvation and food shortages. The first place this will be felt is in poor developing nations. It is there that people live on the edge of economic livelihood, where even a 20% rise in the price of basic food staples can put desperately-needed calories out of reach of tens of millions of families. If something is not done to rescue these people from their plight, they will starve to death.
Wealthy nations like America, Canada, the U.K., and others will be able to absorb the price increases, so you won’t see mass starvation in North America any time soon (unless, of course, all the honeybees die, in which case prepare to start chewing your shoelaces…), but it will lead to significant increases in the cost of living, annoying consumers and reducing the amount of money available for other purchases (like vacations, cars, fuel, etc.). That, of course, will put downward pressure on the national economy.
But what we’re seeing right now, folks, is just a small foreshadowing of events to come in the next couple of decades. Think about it: If these minor climate changes and foolish biofuels policies are already unleashing alarming rises in food prices, just imagine what we’ll see when Peak Oil kicks in and global oil supplies really start to dwindle. When gasoline is $10 a gallon in the U.S., how expensive will food be around the world? The answer, of course, is that it will be triple or quadruple the current price. And that means many more people will starve.
Fossil fuels, of course, aren’t the only limiting factor threatening future food supplies on our planet: There’s also fossil water. That’s water from underground aquifers that’s being pumped up to the surface to water crops, then it’s lost to evaporation. Countries like India and China are depending heavily on fossil water to irrigate their crops, and not surprisingly, the water levels in those aquifers is dropping steadily. In a few more years (as little as five years in some cases), that water will simply run dry, and the crops that were once irrigated to feed a nation will dry up and turn to dust. Mass starvation will only take a few months to kick in. Think North Korea after a season of floods. Perhaps 95% of humanity is just one crop season away from mass starvation.
The carrying capacity of planet Earth has reached its apex
The truth about all this, folks, is that the resources on our planet can only support a limited population, and I think we’ve over-populated the planet to a point where we’re wiping out non-renewable resources at an alarming rate. This means a population correction is due. When there are too many people consuming too much food, using up too much water and burning too much oil, you can get away with a rapid expansion for a little while (a few decades, perhaps), but eventually reality kicks in and there’s a global population correction that brings the population size back down to levels that can be sustained on the planet.
It’s not a pretty picture. We’re talking about the loss of a billion human lives, perhaps more. This is what’s coming. It’s as predictable as the laws of gravity. When you over-populate a planet and use up all the resources, the population eventually finds itself in a resource panic, and mass death ensues. You can observe the same thing with colonies of bacteria on a nutrient-rich petri dish: They will expand at an accelerating rate, multiplying their numbers until there’s no more food left in the petri dish, and then they will experience a massive die-off. You might say that human beings are smarter than bacteria, and that’s true, but as current events are clearly demonstrating, they’re not much wiser! They still doom themselves to the same stupid fate by refusing to look at the long-term implications of their actions.
Humans are really good at making babies and eating food, but they’re terrible at thinking even ten years ahead about the implications of their present-day decisions. That’s why the global population control masterminds call people “feeders and breeders,” by the way. Those are the two things human beings do extremely well: Fornicate and clean their plate. (Not necessarily in that order, though…)
The economies of our world have, sadly, been based on economic models that strongly encourage this kind of consumption and growth. We live in a “throwaway economy,” where people are encouraged to consume and expend as much as possible. No corporation makes money teaching people how to use less. And so we’ve pushed for aggressive expansion since about the 1950’s: Build more, eat more, consume more. We’ve turned farm lands into housing tracts, and rainforests into biofuel fields. We’ve over-fished the oceans, over-farmed the soils and over-extended ourselves to the point where a population correction is inevitable. We, the human race, have painted ourselves into a desperate corner, and the simple fact of the matter is that unless we quickly discover some new energy technology that provides the world with cheap, plentiful energy, we are headed straight towards a global population implosion that will leave a billion or more people dead.
And biofuels, of course, are no answer for this problem. You cannot grow enough corn to solve the problems of an expansionist, imperialistic race of beings (that’s us humans) who have taken over the planet like a cancer tumor, wiped out countless species, destroyed huge swaths of natural rainforests, poisoned the oceans and rivers, polluted the skies and, at every opportunity, betrayed the very Earth that has given us a home in the first place. Humans can betray Mother Nature for a while, but in the end, we will pay a dear price for our own arrogance, greed and lack of vision. The human race is being sent back to kindergarten, where it needs to learn some basic lessons about living in harmony with the planet. Lessons like: Don’t use up all the resources in a few generations. Don’t think you’re smarter than nature. And never forget how much Mother Nature does for us all for free! (Like pollinating the crops, producing oxygen, cleaning the air, water, etc. Read the book Mycelium Running to learn more…)
In time, we will either learn these lessons, or we will perish. It’s really as simple as that. And all these suddenly-popular “save the planet” efforts we’ve seen by corporations recently are just a joke. We can’t save the planet. The planet will be fine after we’re gone, folks. What we’re trying to save here is human civilization. The very idea that we think we can “save the planet” is arrogant all by itself. All we can do is respect the planet and find ways to live with it as polite guests living on a generous host.
Whether humans survive the next hundred years or not, planet Earth certainly will. And frankly, the planet will do much better without us. With humans gone, the Earth would quickly be restored to a vibrant, pristine state, full of life and abundance. The Earth doesn’t need us, folks. But we, of course, certainly need the Earth. The real question is this: Can we learn to play nice and treat the Earth with respect? If not, we won’t be around much longer to worry about it.
Nature needs to be granted legal standing
One final thought: I am an advocate of the idea that Mother Nature needs to be granted legal standing. I believe that humans do not automatically “own” nature, and that we cannot simply cut down forests, bulldoze mountainsides, fish the oceans, build dams and engage in other highly disruptive activities without first getting permission and paying royalties to a global Mother Nature Authority that stands up for the rights of the planet. Nature is not ours to own or destroy. We, as the guests on this planet, have no right to simply assume ownership over other living systems on this planet and exploit them for our own financial gain. The “destroy and consume” model of free market enterprise is simply not sustainable, folks. It does not lead us to a happy future; it leads to our own destruction.
Or, put another way, over the last hundred years or so, mankind has committed countless acts of violence against nature. It has pursued a policy of committing atrocities against Mother Nature — a kind of genocide against anything non-human (animals, plants, fish, etc.). Humans have proven themselves to be, by far, the most violent and destructive life forms to ever exist on this planet. And yet paired with that violence, humans are an infant species, with little or no foresight, with virtually no ability to see the future implications of their own actions. We are, in a sense, the dumbest intelligent creatures ever to walk the face of this Earth.
We can land a man on the moon, but we can’t even prevent our own rainforests from being clear-cut by soybean farmers and cattle ranchers. We can develop high-tech medicines, but we can’t even openly recognize the more powerful medicines found in a simple dandelion plant. We can create amazing computers and televisions and internet technologies the beam information across the globe at the speed of light, but we pollute those information pathways with corporate ads for useless stuff and dangerous medicines that only make our fellow humans beings less enlightened. We are capable of so much, and yet we have accomplished so little. We are, by any honest assessment, a race of little children, running around the planet with far too much power and not nearly enough maturity. We’re like a band of infants with flamethrowers.
Frankly, we don’t deserve this planet, and Mother Nature is about to take it away from us. It’s time for us to either grow up, or perish. And all these people who say “we have to protect the economy, not the environment” should probably just be rounded up and shipped off to Mars where they can play with the Martian dust all they want until they finally get the picture.
Let Them Eat Ethanol!
By SHARON SMITH
Wall Street millionaires have spent months mourning their losses from once ridiculously over-valued investments. Yet these same free market cheerleaders remain blissfully unaware of the magnitude of the crisis facing the real victims of the unfolding global meltdown they so enthusiastically enabled.
For the three billion people who survive on less than two dollars a day, the upward spiral in global food prices has meant a struggle for the most basic of human rights-the right to eat. Rice, bread and tortillas are the staple food for this half of the world’s population. In 2007, the price of grain rose by 42 per cent, and
dairy products by 80 per cent, according to UN figures, and food inflation has accelerated further in recent months.
As the Observer noted on April 6, “A global rice shortage that has seen prices of one of the world’s most important staple foods increase by 50 per cent in the past two weeks alone is triggering an international crisis.” In recent weeks, mass hunger has spawned violent rioting in Burkina Faso, Cameroon, Egypt, Indonesia, Ivory Coast, Mauritania, Mozambique, Senegal and Haiti.
Six straight days of rioting rocked Haiti this past week. Haiti is the poorest nation in the Western hemisphere, where 80 percent of the population lives on less than $2 per day and the typical adult diet consists of just 1,640 calories-640 calories less than the average adult requirement-according to the World Food Program. Haitians have grown tired of subsisting on what has become the common diet: clay, salt and vegetable shortening. “Protesters compared the burning hunger in their stomachs to bleach or battery acid,” noted the Guardian on April 9.
On April 4, thousands of angry Haitians protested in the southern city of Les Cayes, attempting to set the UN police base on fire while stealing rice from trucks. The rioting soon spread to Haiti’s capital, Port-au-Prince, where thousands stormed the presidential palace demanding the resignation of the U.S.’ hand picked president, Rene Preval. Fortunately for Preval, UN “peacekeepers” eventually managed to disburse the starving masses with tear gas and rubber bullets. Their brutal suppression perhaps prevented Preval from meeting the same fate as Jean-Claude “Baby Doc” Duvalier, the U.S.-backed dictator overthrown by a popular rebellion in 1986.
Preval has done nothing to stabilize skyrocketing food prices or to assist those on the brink of starvation-and he made clear in a televised speech on April 9 that he has no intention of doing so now. In a Marie Antoinette moment, Preval scolded Haitian citizens, “The demonstrations and destruction won’t make the prices go down or resolve the country’s problems. On the contrary, this can make the misery grow and prevent investment in the country.”
* * *
In Egypt, where protests and strikes are illegal, thousands of textile workers and supporters in Mahalla el-Kobra rioted against high food prices and low wages on April 6 and 7. Police occupied the state-owned Misr Spinning and Weaving plant overnight to prevent workers from going on strike as they had planned, but protesters responded by setting buildings on fire and throwing bricks at police tear-gassing them. Police repression did not succeed in frightening these protesters but rather only further fueled their anger.
Roughly forty percent of Egyptians survive on less than $2 per day, while the price of unsubsidized bread rose by 10 times in recent months and the cost of rice doubled in a single week. The national minimum wage has remained unchanged since 1984, at 115 Egyptian pounds per month. The Mahallah workers have called for a national minimum wage of 1,200 pounds per month-which would still leave a family of four living under the poverty level of $2 per day.
This week’s rioting in Mahalla is the latest episode in the rising class struggle now reaching deep inside Egypt’s working class. Middle East Report editor Joel Beinin argued of the growing strike movement, “This is potentially the broadest-based gathering of dissent the Mubarak regime has ever faced. The combination of repression, apathy and political demobilization that has sustained autocracy in Egypt for over half a century is being forcefully challenged, making it increasingly difficult for the Mubarak regime, if not its capitalist cronies, to conduct business as usual.” Indeed, Prime Minister Ahmed Nazif rushed to Mahallah on April 8 to announce he is granting the workers a 30-day salary bonus and will address their demands on healthcare and wages.
* * *
Hunger is also rising in the U.S. The unregulated greed unleashed over thirty years of neoliberalism that wreaked havoc on the world’s poorest countries is now exposing the class divide in the world’s richest. It can no longer be claimed that all of those residing in the global North gain prosperity at the expense of the global South.
To be sure, growing hunger in America has only earned passing reference from U.S. media outlets, which still largely take their cue from Wall St. and the White House. On April 7, for example, Tribune Newspapers preposterously featured an article on the plight of that tiny slice of Americans now curbing their exorbitant spending habits. The article feature a down-on-her-luck mortgage broker forced to forego the Botox treatments for which she once regularly dropped $1,800. “I would rather have Botox than go out to dinner,” the woman told reporters-who reported it without irony.
Food inflation in the U.S. has reached a level not seen in decades, with food staples like milk rising 17 percent over the last year, rice, pasta and bread rising over 12 percent and eggs increasing by 25 percent. As job losses mount in the current recession, an unprecedented 28 million Americans are expected to receive food stamps to survive this year. One in six people in West Virginia, and one in ten in Ohio and New York, are now relying on food stamps to survive. And one in three children in Oklahoma have been on food stamps at some time in the last year.
Food stamp “entitlements” are far from generous in the world’s most affluent society, and it safe to say that most people suffering from rising food prices do not qualify for help. According to guidelines posted on the USDA’s website, a family of four is eligible to receive food stamps only if their net monthly income is at or below $1,721. This same family of four is then entitled to a maximum monthly food stamp allotment of $542-the same amount as in 1996. The average subsidy amounts to roughly $1 per meal per person. And 800,000 mostly elderly and disabled food stamp recipients currently receive the minimum benefit of a mere $10 per month, according to the New York Times.
* * *
Mainstream economists have usually described the global food crisis as a food “shortage”, but the shortage has been greatly exacerbated by the merciless laws of the free market. In many cases, the problem is not an immediate shortage of food but merely a shortage of the money to pay for it. World Food Program Executive Director Josette Sheeran recently remarked about Sub-Saharan Africa, “We are seeing more urban hunger than ever before. Often we are seeing food on the shelves but people being unable to afford it.”
The agricultural/food business is now the second most profitable industry in the world, lagging only behind pharmaceuticals. Indeed the automaker Mitsubishi, which also controls the second largest bank in the world, has become one of the world’s largest beef processors, demonstrating the degree to which capital has flocked to the agribusiness sector. The World Bank’s World Development Report 2008 heaped approval on the role of agribusiness, commenting, “The private agri-business sector has become more vibrant. New, powerful actors have entered agricultural value chains and have an economic interest in a dynamic and prosperous agricultural sector and a voice in political affairs.”
But just as agribusiness wiped out small U.S. farmers in the 1980s, it has repeated this pattern around the world ever since. As global justice activist Vandana Shiva wrote in 2006, in India “without market regulation agribusiness corporations will make profits selling costly seeds, buying cheap farm produce, and locking farmers in debt. This has been the process by which the small family farmer has disappeared in U.S.A, Argentina, Europe.”
Now the law of supply and demand has dictated that the new market for biofuels should reduce the production of corn for food by 25 percent in the U.S.–triggering a manmade shortage and a rise in corn prices. Speculators have been hoarding crops on the expectation that prices will rise further. Meanwhile, investors around the world have been fleeing the falling dollar to buy up commodities such as rice and wheat, adding to the speculative momentum and forcing staple prices higher for the world’s poorest people.
The neoliberal agenda long ago lost its shine for the vast majority of the world’s population, although its most earnest proponents have been the last to recognize this stubborn reality. The most recent World Economic Outlook, published by the IMF last fall, did note rising inequality in the richest countries: “Among the largest advanced countries, inequality appears to have declined only in France The recent experience (of increasing inequality) seems to be clear change in the course from the general decline in inequality in the first half of the 20th century.”
Yet the IMF remained optimistic about the future of neoliberalism: “from 2002 to the present, the world economy has enjoyed its strongest period of sustained growth since the late 1960s and early 1970s, while inflation has remained at low levels. Not only has recent global growth been high but expansion has also been broadly shared across countries. The volatility of growth has fallen.”
In recent weeks, neoliberal policymakers appear to have finally realized that widespread hunger could ignite a level of protest that threatens the ruling order worldwide. World Bank president Robert Zoellick recently worried on the organization’s website, “33 countries around the world face potential social unrest because of the acute hike in food and energy prices.”
Perhaps these out-of-touch policy wonks should suggest that the world’s poor start eating ethanol, in keeping with their long-standing bourgeois tradition. And U.S. workers now teetering into the neoliberal abyss should consider following their brothers and sisters around the world in fighting back.
Sharon Smith is the author of Women and Socialism and Subterranean Fire: a History of Working-Class Radicalism in the United States. She can be reached at: email@example.com
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How the greens are making it more expensive to get blotto
In Germany, they call it “liquid bread.” Here in the U.S., frat boys and hipsters cultivating an ironic air call them brewskies. Most of us just refer to it as “beer.” But whatever your name for the stuff, there’s little point in denying that people in both countries love their beer.
The difference right now, however, is that while we Americans can continue to toss ’em back as we always have, German beer prices are skyrocketing. Who or what is the culprit? Corporate greed, perhaps, or an alcohol tax designed to push German beer drinkers to kick their six-pack habit?
It’s something far less spectacular, but potentially more insidious: biofuel subsidies that are pushing more farmers to ditch their barley crops—which are necessary to make beer—in favor of crops that earn them lucrative subsidies from regulators trying to fight global warming. Topping the list of these subsidized crops are rapeseed and corn, ingredient which are used in the creation of biodiesel and ethanol-gasoline fuel blends which supposedly reduce the greenhouse gasses that cause global warming.
Thanks to these crop shifts, the price of barley has doubled in the past two years, an increase that eventually gets passed along to consumers. Some brewers have raised their prices already, and many others are planning on raising them soon. German beer drinkers are already feeling the hit on beers like Erdmann’s Ayinger, which raised its price from 6.10 euros to 6.40 euros over the last year. That’s roughly fifty cents a beer for Germans who consume an average of more than 30 gallons of beer person each year.
But that seems like a fairly small price to pay for such a worthy cause, right? After all, if, as scientists like NASA climatologist James Hansen say, global warming threatens humanity with imminent catastrophe from climactic shifts and sea level rise, then biofuels might be a little more important than brew prices.
Problem is, it turns out that even if you consider climate change a serious threat, biofuels are hardly an effective means of preventing it. In fact, they just might exacerbate the problem. These days, anyone saying otherwise—like, for example, European regulators—must be sloshed.
Two studies published in the journal Science at the beginning of February indicate that, rather than producing less carbon emissions than regular fuels, biofuels, once the full production costs are taken into account, probably produce greater overall emissions than their traditional counterparts. And the difference isn’t tiny, either. According to one of the studies, “converting rainforests, peatlands, savannas, or grasslands to produce biofuels in Brazil, Southeast Asia, and the United States creates a ‘biofuel carbon debt’ by releasing 17 to 420 times more carbon dioxide than the fossil fuels they replace.” As Joe Fargione, a scientist at the Nature Conservancy and author of one of the studies, has explained, “carbon debt” is what results from the additional land clearing, beyond food production, needed to grow biofuel crops. Clearing land releases natural stores of carbon into the atmosphere; so greater reliance on biofuels means increasing our carbon debt.
But it’s not just carbon emissions that pose a potential problem, and it’s not just Europe that’s feeling a biofuel-induced hangover. The United States, for example, spends close to $11 billion a year on ethanol subsidies. By encouraging the planting of biofuels at the expense of other crops, these subsidies pose a serious risk to the world food supply.
According to a report by the Hudson Institute’s Dennis Avery, a former Senior Agricultural Analyst for the State Department, worldwide food demand is expected to double by 2050. So replacing millions of acres of cropland with row upon row of biological fuel wells is a dicey prospect at best. When biofuel crops replace food crops, we are, as Avery puts it, effectively “burning food as auto fuel”—giving all sorts of potential new meaning to those fast food-gas station hybrids that currently litter our interstates.
Adding to the problem is that most biofuels are not as efficient as gasoline. For example, according to a report by the Energy Information Administration, biodiesel actually reduces fuel economy, putting out about 11 percent less energy per gallon than petroleum diesel. Meanwhile, a gallon of fuel ethanol is reported to be equal to only .67 gallons of conventional gasoline.
None of this should exactly come as a surprise. Free-market think tanks have been issuing warnings about the efficacy and true costs of biofuels for years. Yet only now are mainstream media figuring it out. Time has run three stories on the issue over the last few months, including a cover story titled “The Clean Energy Scam.” The New York Times hyped the Science studies with a lengthy write-up that leapt onto the website’s most-read list. Rolling Stone recently ran an expose on the harmful effects of U.S. ethanol policy, and now even liberal Times columnist Paul Krugman’s gotten into the act.
Part of the reason for all the attention is that it’s becoming increasingly clear that biofuel subsidies, in addition to destroying crops and potentially accelerating anthropogenic global warming, seem to be indirectly fueling the destruction of the rainforest. As farmers switch away from soy beans toward subsidized biofuels and soy bean prices rise as supply goes down, South American farmers have expanded their land-clearing efforts in an effort to pick up the slack. When forests in the Amazon start burning, environmentalists start paying attention.
Better late than never, though it’s worth making sure that environmentalists fully appreciate the law of unintended consequences here: Policies designed to increase use of biofuels contribute to global warming, reduce the planetary food supply, destroy the rainforests—and, oh yes, drive up beer prices. And yet both the U.S. and Europe are spending tens of billions a year on subsidies. Maybe we should grab a drink, while we can still afford one.
It’s Now ‘Official’: Ethanol Is a Scam
posted on: April 10, 2008
Paul Krugman in the NY Times, “Grains Gone Wild”:
Where the effects of bad policy are clearest, however, is in the rise of demon ethanol and other biofuels. The subsidized conversion of crops into fuel was supposed to promote energy independence and help limit global warming. But this promise was, as Time magazine bluntly put it, a “scam.”
This is especially true of corn ethanol: even on optimistic estimates, producing a gallon of ethanol from corn uses most of the energy the gallon contains. But it turns out that even seemingly “good” biofuel policies, like Brazil’s use of ethanol from sugar cane, accelerate the pace of climate change by promoting deforestation.
And meanwhile, land used to grow biofuel feedstock is land not available to grow food, so subsidies to biofuels are a major factor in the food crisis. You might put it this way: people are starving in Africa so that American politicians can court votes in farm states.
OK, now that Paul Krugman’s on board by coming out against ethanol, it’s now official: Ethanol is a complete and total scam.
Anytime you have Paul Krugman agreeing on ethanol with such a diverse group as the WSJ, Reason, Magazine, the Cato Institute, Investor’s Business Daily, Rollingstone Magazine, Christian Science Monitor, the New York Times, John Stossel, The Ecological Society of America, the American Enterprise and Brookings Institution, the Heritage Foundation, George Will, and Time Magazine, you know that ethanol has to be one of the most misguided public policies in U.S. history.
So who is left out there supporting ethanol? You sure won’t find very many scientists, economists, policy groups, or editorial page contributors. But, ethanol has been very, very good to corn farmers and ethanol producers like Archer-Daniels-Midland (ADM), the largest producer of ethanol in the United States. ADM stock has quadrupled over the last five years, from about $10 to about $40 per share, and increase of 300%, while the S&P has only increased by about 50% during the same period (see chart above).