Wednesday, June 16, 2010

Ethanol and the Oil Spill

Kobi Abayomi has a useful piece discussing one of the unintended consequences of the BP oil spill--even more momentum for the ethanol industry:

We might have expected losses of oil output from the recent disaster in the Gulf – direct losses from production and indirect increased costs – to place additional pressures upon the fuel supply. We would then expect, in ordinary political terrain, for these pressures to further exacerbate competition among corn for feed stocks, exports and food and corn to ethanol.

This is important. Obama is rightfully (finally!) starting to use the disaster to call for overall energy reform. That's important, but equally vital is how we replace petroleum. Abayomi points out that Obama recently called for a tripling of ethanol production by 2022. This is not useful. Tripling ethanol production means that corn doesn't get used for food. And while Americans' addiction to corn (and farm states' addiction to agricultural subsidies) means we are constantly finding new and often unhealthy ways to consume corn, in Mexico and other poorer corn-centric nations, rising corn prices has real consequences. NAFTA led to the flooding of cheap American corn onto the Mexican market, driving farmers off their land and to the United States. But rising corn prices a couple of years ago as commodity prices skyrocketed and Americans began using corn to fuel their vehicles created a new panic situation in Mexico. People wondered how they would pay for these pricey tortillas, which is another way of saying they wondered how they would eat.

Certainly we need a real energy policy. But relying on ethanol as central to that strategy doesn't help us very much from an environmental or a foreign policy standpoint.