Keep Kicking that Ethanol Can

By David L. Brown

Yesterday I posted an analysis of the current forecasts for a poor corn crop due to heat and drought, and also mentioned that the obvious step to take is to suspend all ethanol production to free up the approximately one-third of the U.S. corn crop mandated to go to distilleries and into our gas tanks. If the corn crop drops by a significant degree, as seems likely, that mandated amount of corn will take an even larger bite out of the supply, perhaps even surpassing one-half of the total.

It’s deja vu all over again, as Yogi Berra said. Back in 2008 I posted this editorial cartoon that appeared on the cover of Quill, the magazine of the Society of Professional Journalists. (I am a 50-year member of SPJ and am immediate past-president of the New Mexico chapter.)

That cartoon is even more appropriate today, because the USDA is refusing to put a stop to the travesty even though a world food crisis is inevitable, putting hundreds of millions at risk of famine. And today, writing in The Financial Times, José Graziano da Silva, the director-general of the UN’s Food and Agricultural Organization, wrote (as reported by Reuters here):

“Much of the reduced crop will be claimed by biofuel production in line with U.S. federal mandates, leaving even less for food and feed markets,” he wrote in an op-ed just a day before the U.S. government issues a pivotal crop report that is expected to show U.S. corn output falling to the smallest in six years and stockpiles at near record lows.

“An immediate, temporary suspension of that mandate would give some respite to the market and allow more of the crop to be channeled towards food and feed uses,” he wrote in a high-profile yet indirect message to Washington.

Obviously, the line has been drawn in the sand by those in charge in Washington and it’s to favor the owners and operators of ethanol plants vs. hundreds of millions of endangered human beings. And not to mention the “inconvenient truth” of food shortages and higher prices right here at home. Already, as I mentioned yesterday, ranchers are liquidating their herds in the face of dried-up pastures and hay crops. How bad is it way out West? I saw a post a few days ago from a rancher in west Texas who said that he’s received just three inches of rain in the last two years.  His critters have long since gone to market and he’s facing a bleak future.

In a recent essay (“A Tragedy in the Making,” here) I documented the connection between food prices and civil unrest in the Third World. Food is clearly at the root of recent “Arab Spring” uprisings in Tunisia, Libya, Egypt, currently in Syria and other places. The latest developing round of food shortages and attendant cost increases are sure to spark even more such “revolutions,” and they could even spread beyond the Arab sphere to include such places as India, China, North Korea, and even (well, yeah) Mexico.

The reason all these places are so vulnerable to food cost and availability is that they are living much closer to the razor’s edge of famine than richer nations such as the U.S. By comparison, here in America food has recently accounted for around 8 percent of the CPI (cost price index)—although we can expect that to rise, perhaps dramatically. Here is a bar chart that shows the percent of CPI in major nations compared with America at the far right:

As you can see, the worst cases are the two nations with the greatest populations, India and China. Falling in line below those two giants are Poland, Hungary, Mexico, Japan, Portugal, Spain and Greece, all above the non-U.S. average represented by the yellow bar. Hmm, see anything curious about those last three names? Yes, they are members of the so-called PIIGS, the failing members of the EU. Poland and Hungary are also EU members, and immediately below the yellow line are two more EU nations, Czech Republic and Italy, the last of which is a third member of the PIIGS (the remaining PIIGS being Ireland which is fairly far down on the chart next to Canada.

Remember, these are figures  from prior to the present rise in food prices. And, here’s a lesson to keep in mind: When food prices go up, income doesn’t necessarily go up to compensate. In fact, it only would do so in a completely pure communist economy of which none currently exist. And, even if there were such a worker’s paradise on earth, and assuming its management attempted to compensate for every rise in food prices by raising incomes, it would soon be a bankrupt nation. (For examples see former Soviet Union and present day Zimbabwe which is now issuing one hundred trillion dollar bills).

But never mind all that, because by gosh the important thing is to keep those ethanol plants going. In fact, there’s a move on to mandate 15 percent ethanol content in our gasoline, up from the present 10 percent. That would be a particularly brilliant stroke, since most existing automobile engines cannot burn that hot a blend and would be destroyed. But, oh wait! I forgot for a moment that the government owns GM and Chrysler. If all our engines burn up by mandated E15 fuel, we’d have to buy Volts and other “green” vehicles. GM would emerge as the savior of the new collective that used to be America. We might not have a chicken in every pot, but by golly there’ll be a Volt in every garage. And those over-priced fire starters will stay there, too, because there won’t be enough electricity to charge the darned things, which will be yet another advantage to our nation by helping to further reduce our wasteful and unconscionable energy use toward the ultimate goal of zero.

It’s a win-win! W0o-hoo! (But don’t sell short those snowballs in hell, for they might soon be turning the Devil into Frosty the Snowman. Any…day…now.)

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