The Death of Biofuels

This AP story claims that corn-based ethanol is dead and that Mexico's tortilla crisis in 2006 killed it.

Basically, it was when the price of tortillas rose rapidly in 2006 and into 2007 that people began to realize that societies needed to use food to feed people rather than feed their vehicles. Mexicans freaked out about this. I was in Mexico City as this was happening and it dominated front-page headlines almost every day.

I wonder if corn-based fuels are dead though. Certainly U.S. policy makers, particularly powerful politicians from farming states have no intention on letting it die. And does anyone think that American consumers will not clamor for ethanol once gas prices rise again? Certainly American consumers are more concerned with gas prices than starvation in the developing world.

The lesson of the story is that biofuels are alive and well. But not in ways that help U.S. politicians. Ethanol from Brazilian sugar has proven to be pretty effective with little affect on the world sugar supply. Europeans use rapeseed. But none of this means giant profits for American agribusiness.

At the core of the issue is scarcity. Food prices have gone up for many reasons. There are too many people on the planet. People in China, India, and Brazil want to eat like Americans. They want to drive and live like Americans too. We want to have more things every day. All of this takes up precious land and resources. While we definitely should not be taking food out of people's mouths to drive our Hummers, the problem of food prices, hunger, and scarcity run far deeper than just fuel.