Ethanol: The Side Effects

Take a look at this:

They don't have enough to eat. Five people are dead in Port Au Prince, Haiti after a week of food riots. Unions in Burkina Faso have called a general strike to protest the high cost of grain. Food riots have rocked Egypt, Cameroon, Indonesia, Ethiopia and other nations. In Manila, police with M-16s have supervised the sale and distribution of subsidized grain. Hoarders have been threatened with life imprisonment. In Thailand and Pakistan, troops are guarding fields and warehouses. In Egypt, the army has been called out to bake bread. Even in the United States, a run on rice has caused big-box retailers Sam's Club and Costco to limit the amount of rice consumers can purchase per visit (though the cap is extremely generous -- each customer can buy four 20 pound bags of rice per day at Costco).

That sounds like the plot to one of the futuristic apocalypse/disaster movies from the 1970s/1980s. But it's not. It's real life and it's happening today. Why? Well, the answer to that will surprise most liberals and green activists.

In his epic work, Wealth Of Nations, Adam Smith noted that whenever a transaction between two people occurred, it was because both believed they were gaining something in the exchange. Further, Smith noted that when both parties did gain something, there were unintended side-benefits that went beyond the single transaction.

Well, the idea of side-benefits also applies to unintended consequences. What you read in the above excerpt is just that: unintended consequences of a transaction that has been forced upon us by our own government. I am, of course, referring to ethanol.

It is simple economics. When supply goes down, price goes up. It does not matter the reason that supply went down, just that it went down. When our government mandated the use of ethanol in our gasoline, it cut into the supply of corn that we use for food and food production. As a result of this, the price of food has gone up, not just here at home, but worldwide.

More, from Mona Charen over at TownHall.com:

It seemed like such a painless solution. It fits on a bumper sticker. In fact, I saw one yesterday: "Don't burn fuel. Grow it." The EU adopted a goal of producing 10 percent of its fuel for road transportation from biofuels by 2020. The U.S. government (cheered on by the agriculture industry and environmentalists) adopted a mandate of 36 billion gallons of biofuel production by 2022 -- a five-fold increase over 2006 levels amounting to 28 percent of the U.S. grain harvest. Congress and the president joined hands to pass this feel-good legislation just when, as the Wall Street Journal pointed out, new data were demonstrating that biofuels cost more energy than they save. "When the hidden costs of conversion are included, greenhouse-gas emissions from corn ethanol over the next 30 years will be twice as high as from regular gasoline. In the long term, it will take 167 years before the reduction in carbon emissions from using ethanol 'pays back' the carbon released by land-use change."

Of course, that will be a small relief to those who will starve over the next 167 years just so we can feel good about a law that will never reach it's stated goals.

We aren't even sure that Global Warming (or any kind of climate change) is even human induced. But we can be absolutely sure that whatever we try to do about it will have serious costs.

Mona's parting shot:

"When millions of people are going hungry," Palaniappan Chidambaram, India's finance minister told the Journal, "it's a crime against humanity that food should be diverted to biofuels." This is not to suggest that all efforts to conserve energy or maintain the environment are folly. Rather, it's a cautionary tale. How much environmental improvement do we really get and -- this is paramount -- at what price?

Yes. At what price? I have no doubt that the environmentalists and others who cheered on this bill went to sleep that night feeling very good about themselves.

But, as was noted in the book (and movie) The Neverending Story, when travellers reached the second gate to get to the Southern oracle, they looked into a mirror and saw their true selves. Brave men found they were truly cowards and kind people found they were truly cruel. Those who cheered on this ill-thought out ethanol law fall in the latter category.

You can access the complete column on-line here:

Let Them Eat Ethanol?
Mona Charen
TownHall.com
April 25, 2008