Ethanol Eco-Disaster

by Bill Walker

(Fade in) The delicate, fainting environment is in distress; it can’t pay its fuel bill. Heroic Merry Men of the IRS carrying MP5s and wearing green tights hold up the sneering, selfish, unworthy middle class. They give the looted bank accounts to the noble corn-ethanol producers. The chairman of Archer Daniels Midland rides off into the beautiful sunset on his yacht, waving his stock options. (The Happy Ending)

The Math-based Version

Let’s take the very rosiest assumptions for corn ethanol, from the paid PR flacks who lobby for the subsidy. They claim that it takes 35,000 BTUs of energy to make 77,000 BTUs of ethanol from corn. No one else gets a ratio anywhere near that good; some calculations show that corn ethanol actually costs energy to make (and fuel ethanol only has 76,100 BTU per gallon according to the EPA). But even this most unrealistic case assumes that about half the energy in a gallon of subsidized ethanol has to come from somewhere else. For comparison, it takes around 22,000 BTU to make a gallon of gasoline. Gasoline contains about 114,000 BTU per gallon, so there’s a clear energy profit.

Looking at market price instead of BTUs, on June 6 wholesale cost for ethanol was around $2.67 per gallon, vs. 2.09 for gasoline. This isn’t counting the cost of the subsidies; even cheating, corn ethanol still isn’t as good as gasoline. And mixing the ethanol in to make gasohol adds further refining costs.

So, the ethanol programs force us to pay more per gallon for a diluting fuel additive that gives only 2/3 the miles per gallon. This means more gas station stops, more wasted time and gas. And the ecological effect of each fuel?

Oil-based gasoline comes from very small drill holes in deserts, tundra, and sea bottoms. U.S. ethanol is made from corn, grown in large dusty monoculture fields that must be covered with pesticides and herbicides. Ethanol programs subsidize soil destruction, deforestation, habitat destruction, and bunny-killing.

All so-called “biofuels” are a step backward ecologically. The U.S. has reforested; 59% of the northeastern U.S. is now forest. The eastern U.S. has more forested acres now than in the mid-1800s. This reforestation is due to our replacement of biofuels with higher-tech oil, gas, and nuclear power. If we allow the market to improve our technology, eventually we would only use “biofuel” for grilling our salmon.

Not too many people are in favor of cutting down forests, polluting streams, and exterminating wildlife for money-losing programs that make us all worse off. So why has welfare for corporate moonshiners lasted since 1980? Some say that it is because these programs transfer billions to a few powerful people, while inflicting only a few hundred or perhaps a thousand dollars in damage on each American. Thus the concentrated interest has incentive for rent-seeking campaign contributions, while the burden on the average worker is lost among all the other taxes and government-sponsored cartel and monopoly exactions.

But there is also another ecological factor here: infosphere pollution. Those who benefit from multi-billion-dollar subsidies will spend tens of millions to spew polluting memes into the media. Thus, false science and economic fallacies fill up our hard drives and our minds, outcompeting the unsubsidized species.

According to the Environmental Working Group (a generally pro-ethanol group), corn subsidies alone were at least 41.9 billion from 1995-2004. The EWG points out that U.S. politicians (including Hillary) have only supported expensive subsidized ethanol; overseas ethanol from more-efficient sugar cane production is kept out by tariffs. (So don’t write me that someone in Brazil has a great ethanol production company. I’m sure they do, but you can’t buy from them!)

Of course corn isn’t the only thing subsidized. From the evil-stained pages of the Fedronomicon, here’s the 2007 Department of Agriculture budget. Note that under the rigid fiscal restraint of the Republican “Contract With America,” the budgetary authority for this one agency in FY 2007 is $96.4 billion. Those interests trying to capture this money will spend a lot to misinform the public.

Can we overcome infosphere pollution? Or are we doomed to pay for the destruction of our own environment, because the majority of media is produced specifically to confuse us into supporting parasitic special interests?

Editor’s Note: Bill Walker works in HIV and gene therapy research in Rochester, Minnesota. Our team here at The Daily Reckoning has assembled a fine report on the obstacles the ethanol market faces. Read the full report here:

Investing in Ethanol

The Daily Reckoning