A corny predicament

Saturday May 14, 2011

As the price of gasoline has increased, some have drawn attention to ethanol as a way to help bring the cost down, or at least help keep it somewhat reasonable.

A study released by Iowa State University and the University of Wisconsin showed that the 10 percent ethanol mixture in gasoline pushes down the price of gasoline by an average of 25 cents a gallon.

Without ethanol, the report states, gas prices would range between $5.50 and $7.70 a gallon. The addition of ethanol to gasoline saves the average American family about $800 a year in fuel costs, according to the report.

But all this comes with one caveat: The corn-ethanol industry has been the recipient of billions of dollars in subsidies and tax credits over the past 10 years.

Between 1999 and 2008, ethanol refiners received about $23 billion in support from both the federal and state governments.

Between 1980 and 1997, Archer Daniels Midland alone received $10 billion in subsidies, and each dollar of net profit for ADM costs each American taxpayer $30, according to the libertarian Cato Institute.

It probably won’t surprise you to learn that between 1990 and 2008, ADM’s political action committees and executives gave more than $8 million to political campaigns, both Democrat and Republican.

And that doesn’t count cash doled out through trade groups, which give companies such as ADM "substantial influence without leaving fingerprints," according to a report issued by the Vermont Law School earlier this month.

The result?

"Promising industries, like solar and wind, have fought for market share ... but the corn-based ethanol industry has raked in three-quarters of available tax benefits and two-thirds of the subsidies," stated the report.

Patrick Woodall, of the Food and Water Watch, which co-wrote the VLS report, said the point at which ethanol contributes to keep the cost of gasoline down is right around the $4 range, said Patrick Woodall.

"At that point, the cost of gas becomes high enough that ethanol becomes a more commercially viable alternative as a portion of the fuel," he said.

When gas is expensive and corn is cheap, the tradeoff makes sense, said Woodall. But, as he noted, gas is not always expensive and corn is not always cheap.

And consumers also need to realize that because of ethanol in gas, they get less miles per gallon than they would if they were burning straight gasoline.

"It’s a little bit of a wash," said Woodall.

But of most concern to Food and Water Watch is that the mega-corporations that dominate the corn-ethanol industry are squeezing out the little guys, especially farmer-owned co-ops, and using our tax dollars to do so.

If the price of gas stays high, do we need to keep subsidizing giant refiners? Or should that money go to support small, locally owned co-ops?

And shouldn’t some of that money be used as, and excuse the pun, seed money for next-generation biofuels?

The Vermont Law School report recommends that subsidies for corn-based ethanol be phased out and transferred to cellulosic (agricultural, forestry and crop residues, wood waste, municipal solid waste trees and grasses) and algae biofuel refiners.

Creating ethanol from cellulose is currently more complex and expensive than from corn, but the bang that can be found for the buck means that the cellulose and algae fuel industries could be the fuel of the future.

Cellulosic ethanol generates 540 percent more energy than it takes to produce, while corn ethanol produces only 25 percent more, stated the VLS report.

And as the technology is perfected, with research subsidized by the federal and state governments, the price for the production of that fuel is bound to go down.

So maybe the subsidies -- and those going to big oil -- could instead be redirected to fuels that VLS believes have "the potential to be more efficient, environmentally friendly and financially more feasible ..." and to keep small farmer co-ops in business.

Not only would these new fuels reduce our dependency on imported fuel and spark hiring in the biofuels industry, they would also reduce our greenhouse gas emissions.

That seems like a win-win-win solution for our current energy woes, but it can’t happen overnight, and it can’t happen while our legislators continue to kowtow to mega-corporations that fill their campaign coffers.


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