1. Skip to navigation
  2. Skip to content
  3. Skip to sidebar
Source link: http://archive.mises.org/7861/the-many-evils-of-ethanol/

The many evils of ethanol

March 1, 2008 by

This MSNBC article notes how the price of wheat is being driven up not just by the devaluation of the dollar, but by “increased demand” for ethanol.

The article fails to mention that the demand for ethanol has not just magically increased on its own, but has increased only because massive government subsidies have made it more relatively attractive. Nor does it mention that ethanol is also now much more attractive to farmers because it receives fat subsidies that wheat-growing does not receive.

The result has been massive distortion in the market, causing a flight from other grains into corn, producing smaller supplies and thus higher prices for the other grains such as hops and wheat.

Corn for food has become much more expensive as well, and in Mexico the price of tortillas has skyrocketed because in the North American market, corn is now being grown for (subsidy rich) ethanol and not for food.

On top of all of this is the fact that it takes 5 gallons of water to produce 1 gallon of ethanol. So, the demand for water in arid western states has spiked.  This will likely impact the farmers themselves less than city dwellers (since farmers have priority on water through comfy arrangements with governments), but it will likely lead to higher urban water prices and many more lectures from politicians about conserving water. 

Of course, if the government were not meddling with the corn market to begin with, there would be much more water to go around, and food would be cheaper. Ethanol has never been economical or environmentally sound, but ethanol subsidies are an easy way to buy votes.  If one ever needs proof of the latter, one need only drive through Nebraska where the many billboards and ads proclaiming the messianic power of ethanol are enough to make a believer of any politician.

{ 31 comments }

MIKEF March 1, 2008 at 9:01 am

I am curious as to why hops were mentioned. They are certainly not a grain.

M E Hoffer March 1, 2008 at 9:45 am

Hops, though not a grain, need land for growing..

That land, now planted in Corn, isn’t growing Hops..

Hops, used in beer, mostly, are, now, increasingly, in short supply..

this art.: http://www.boston.com/lifestyle/food/articles/2008/01/09/with_fewer_hops_prices_jump/

speaks to a different aspect of ‘incentivization’–low i-rates, more housing…

Brazil March 1, 2008 at 9:51 am

I want to know why the U.S. government embargoes Brazillian ethanol? Brazil has plenty of water, land and the sugar cane fields to manufactire and export cheap ethanol to the U.S.

Oh, I know why! The Agri-Business industry has bought off our politicians to protect their monopoly on domestic ethanol and maintain control of its price. Where is the Leftists, Neo-Liberal fascists outrage? In Obama’s pocket?

Thanks to the likes of Socialist Government protectionism you and me will pay dearly.

Bill Ott March 1, 2008 at 10:09 am

Brazil, you hit the nail on the head. Sugar cane produces significantly more alcohol per weight than corn. So our sugar embargo is all the better for farmers and all the worse for consumers and the environment.

Better than producing the alcohol in Brazil, we could buy cane from Brazil among others INCLUDING CUBA and eliminate the subsidies.

I have always maintained that the real Axis of Evil is Tobacco, Sugar and Citrus and that they are the real reason the US does not trade freely with the impoverished nations of the West Indies and Brazil.

Hmmm March 1, 2008 at 10:34 am

“Want to know why Senator McCain did not campaign in Iowa? Because he has
voted against ethanol subsidies, which are a religion in Iowa. He would have lost bigtime
and ruined his chances to win the nomination.”

http://www.frontlinethoughts.com/pdf/mwo022908.pdf

Flash March 1, 2008 at 11:05 am

Iowa Public TV – January 3, 2008

“So how do the candidates of 2008 actually stand on ethanol? The top five Democratic contenders all support an aggressive renewable fuels mandate and the current ethanol import tariff.

“But some critics have blasted Senator Hillary Clinton for changing her position on ethanol. Clinton voted against a 2005 energy bill due to concerns that ethanol production would replace the gasoline additive MTBE and raise gas prices for her constituents. She now supports ethanol as a nationwide solution for energy independence.

“The top two Republican contenders in Iowa, Mitt Romney and Mike Huckabee, both support a renewable fuels mandate and an ethanol import tariff. Rudy Giuliani supports tax subsidies for ethanol but has yet to publish his position on mandates. Other Republicans like Fred Thompson, Ron Paul, and John McCain are critical of government intervention. Instead of mandates, these candidates have called for a free market in alternative energy.

McCain: “I trust Americans, I trust the markets, and I oppose subsidies.”

“Senator John McCain’s position on ethanol arguably is the most controversial of any candidate. In 2000 McCain blasted ethanol subsides.

McCain: “Those ethanol subsidies should be phased out, and everybody here on this stage, if it wasn’t for the fact that Iowa is the first caucus state, would share my view that we don’t need ethanol subsidies. It doesn’t help anybody.”

“In 2008, McCain’s views have slightly changed. He still opposes subsidies for both ethanol and oil but supports the import tariff.

McCain: “Subsidies are a mistake and I don’t believe that anybody can stand here and say that they’re a fiscal conservative and yet support subsidies which distort markets and destroy our ability to compete in the world.”

“McCain has yet to reach one of the top three positions in recent Iowa polls and according to Jerry Taylor, you can partially blame his views on ethanol.

http://www.iptv.org/iowajournal/story.cfm/143

Yancey Ward March 1, 2008 at 12:07 pm

As sure as the sun rising in the morning, with enormous pressures building in the food market, there will come calls and proposals to subsidize even more the production of other agricultural products to balance the damage being done by the ethanol subsidies and mandates. This is the bureaucratic mind at work.

Fephisto March 1, 2008 at 1:09 pm

You guys are making me hate living in Iowa.

david March 1, 2008 at 5:29 pm

Stop paying rich people not to grow before you stop subsidizing real famers. Ted Turner (and many others) can grow corn if he wants to get paid for owning land.

david March 1, 2008 at 5:34 pm
Paul March 1, 2008 at 11:12 pm

My initial comment is that all this “blame Ethanol” is getting out of hand. I am no expert on alternative fuels but I seem to be seeing a lot of opinion thrown around and picked up by others as fact. Right now, blaming ethanol is like throwing the baby out with the bath water.
Yes – foodstock is not the best material for ethanol; there are many higher yielding sources than corn. And yes – subsidies exacerbate it. But the base element at work here is good old American greed. Mono-agriculture, agri-business and false capitalism all work into the mix.
There are significant benefits to ethanol use, especially in the near term, but it needs a balanced approach untainted by special interests (fat chance these days).
I’d be interested to read why ethanol is so bad for the environment such that it makes sticking with crude a viable option – and not a reference to a news article that itself references nothing further. I personally haven’t yet found anything but innuendo.

Jake March 2, 2008 at 9:28 am

The…errrr…kernel of this whole ethanol situation can be traced back to monetary inflation.

You guys should know the vicious circle….cheap money –> more cars + more cars + more cars +++++ –> exceeding demand for limited resources drives up prices. Government interferance = ethanol + subsidies. Money flows away from consumer goods to capital goods in boom.

Thus short supply of food commodities which = rising prices which = “inflation” from hell.

Right?

Francisco Torres March 2, 2008 at 1:37 pm

I’d be interested to read why ethanol is so bad for the environment such that it makes sticking with crude a viable option…

Ethanol production requires more energy for the conversion plus land and water use (not to mention use of fertilizers and pesticides), for the amount of energy obtained, than drilling oil off the ground and distilling it into gas or diesel. The net effect is a loss of energy with Ethanol than with gas.

The cleanest fuel that can be used right now is natural gas, which has a molecule of only one carbon atom. It is by far much cleaner to burn than ethanol, but you do not hear that from politicians…. they’re too busy kissing up to the Agri-business lobby, including Obama.

P.M.Lawrence March 2, 2008 at 11:43 pm

Francisco Torres, it is not true in general that “Ethanol production requires more energy for the conversion plus land and water use (not to mention use of fertilizers and pesticides), for the amount of energy obtained, than drilling oil off the ground and distilling it into gas or diesel. The net effect is a loss of energy with Ethanol than with gas.”

It is true that producing it the current US way suffers from all those things – but those are also a consequence of the imposed market distortions. You can produce ethanol in a way that produces more energy than it needs in artificial inputs by rotating crops, running farm and processing equipment off gasifiers burning waste, etc. It’s still not worth it, because you need too much land and you end up crowding out food production, but you can do it. The arguments against ethanol in general are real and overwhelming, but the “energy return on investment” argument only applies to the screwed up distorted method of production – it’s easy to do it right technically, even though it’s still unsound economically.

TokyoTom March 3, 2008 at 3:51 am

Ryan, I hadn’t heard any one link ethanol production (midwestern corn) to increased demand for water in arid western states. I think you may be off here.

However, you might also mention that growing corn typically results in greaters fertilizer runoff, helping to fuel to dead zone at the mouth of the Mississippi.

Please there’s all that bad stuff about how European mandates for biodiesel is allegedly fuelling tropical forest destruction in SE Asia (which is a bit off, as the real problem is the theft of indigenous land by elites).

If we can bring the Iraq war onto the budget, the revenue squeeze might provide an opportunity to end some of these subsidy programs – which the MSM cintinues to criticize: http://www.nytimes.com/2008/03/01/opinion/01hedin.html?em&ex=1204693200&en=4f0386d314947329&ei=5087

Ron March 3, 2008 at 11:05 am

TokyoTom says: “I hadn’t heard any one link ethanol production (midwestern corn) to increased demand for water in arid western states.”

I posted on my own blog about this very thing just a few days ago.

On the usage side of ethanol, one argument against it is that it reduces efficiency in any internal combustion engine not specifically designed for it, as this chart shows. This is due to the fact that ethanol burns less aggressively than gasoline at the compression levels typical of most internal combustion engines (around 7-10:1). In order to produce a comparable amount of power, compression ratios would have to be much higher (around 17:1), which places a great deal more stress on engine components and generates a lot more heat. Consequently, it’s not economically feasible to mass produce engines designed to burn pure ethanol. Of course, we could always circumvent economics by passing a law forcing auto manufacturers to start doing so…the costs be damned.

Ron March 3, 2008 at 11:16 am

Correction: The chart I linked to doesn’t show efficiency for the 10% ethanol/90% gasoline mix mandated in most states. I’ll find more info on that.

Robert March 3, 2008 at 11:56 am

I understand that it takes more energy, in terms of the energy value in fossil fuel, to make a gallon of ethanol than the energy value which ethanol actually contains.

Now that’s a real sustainable concept…..

Ron March 3, 2008 at 2:24 pm

Robert, you’re absolutely right. The law of conservation of energy states that energy is never created or destroyed, rather it merely changes forms. It’s impossible to get more energy out of something than you put into producing it.

Growing and processing corn into ethanol requires a great deal of energy, with nature providing only a small portion thereof. The same holds true of any other “alternative fuel”. I saw a documentary once about a company that produces cars that run on compressed air, which sounds great until you realize that a lot of energy goes into compressing the air in the first place. This is the beauty of fossil fuels…nature has spent millions of years putting energy into its creation, so the energy returned is much greater than what we put into its extraction and refinement. Of course, that means it can’t last forever. There’s no such thing as a free lunch.

TokyoTom March 3, 2008 at 8:27 pm

Ron, youu’ve missed my point, which is not that grwoing corn takes water, but that for that very reason the “cornbelt” does not include the arid West.

pickle March 4, 2008 at 2:14 pm

Whoa,

Ron and Robert you guys are so way off. When Ford created his first motor it was intend to run on 100% achocol! Which is what ethanol is, you can drink it. Get your facts straight! Second, Ethanol out performs gas. It has more octane. Why do you think race cars use it. Third, Ethanol way more cleaner than gas. I produces almost zero emissions. I am talking about near 100% ethanol fuel, not blended ethanol. When you hear reports about ethanol and emission they are talking about the production plants. But there are technologies to counter this which they are now tranisitioning too. They can use solar power to produce ethanol, they dont have to use oil. They are also using the wasted parts of the plant stalk to fuel the fire to produce ethanol. The CO2 released when burning the plant is a zero net effect. Where do you think the plant got the CO2 from? When growing sugar or corn the plant sucks CO2 from the air, when you burn it, it releases it back. You can make ethanol without one once of oil. When you burn oil you release CO2 that was buried underground for millions of years and its running out. Heard of peak oil?
http://www.msnbc.msn.com/id/11603199/
http://www.ethanolrfa.org/resource/facts/engine/

Greg March 5, 2008 at 8:26 pm

pickle,

Octane is just the knock resistance rating, and has nothing to do with the amount of energy release when the combustion occurs. The reason high performance engines need a higher octane fuel is because they usually have a much higher compression ratio than normal vehicles, and the higher amount of pressure will cause a lower octane fuel to combust without a spark, which means it’s burning sooner than it should, and might even cause damage over time. (http://en.wikipedia.org/wiki/Octane_rating#Definition_of_octane_rating)
As far as ethanol out-performing gasoline, I have no idea…that could likely be true, but it has nothing to do with the octane rating.

pondering_it_all March 6, 2008 at 5:45 am

“compression ratios would have to be much higher (around 17:1), which places a great deal more stress on engine components and generates a lot more heat. Consequently, it’s not economically feasible to mass produce engines designed to burn pure ethanol.”

Not feasible eh? But diesel engines start at about 16:1 and go up to around 25:1, and somehow companies manage to build them, customers buy them, and they run for a very long time. Raising the compression ratio increases the engine efficiency and the power output. Gasolene engines are limited to such a low CR because gasolene is such a poor fuel, in terms of pre-ignition and detonation. Of course, you can solve those problems by adding 15% ethanol to get E85 with an octane rating between 100 and 105!

pondering_it_all March 6, 2008 at 5:55 am

“On top of all of this is the fact that it takes 5 gallons of water to produce 1 gallon of ethanol. So, the demand for water in arid western states has spiked. This will likely impact the farmers themselves less than city dwellers (since farmers have priority on water through comfy arrangements with governments)”

Total fantasy! I just happen to BE a farmer in the arid west, and the government water system has cut my water allocation by 30% while letting urban dwellers keep on watering their lawns and filling their pools.

Besides, nobody grows commodity corn (used for ethanol and feedstock) in “the arid west”. That is done in the corn belt where it can be done without irrigation. So my water cut has nothing to do with diversion into ethanol production. It has everything to do with the weather patterns, an out-dated water storage and delivery system, and rising population.

TokyoTom March 6, 2008 at 8:01 am

pondering: “So my water cut has nothing to do with diversion into ethanol production. It has everything to do with the weather patterns, an out-dated water storage and delivery system, and rising population.”

Not to mention problems with water rights, including the free for all pumping of once bountiful aquifers like the Ogallala, and the fact that municipalities encourage overconsumption by charging an average cost rate rather than at replacement cost (just like with our over-regulated electric utilites).

Don’t need to harp on changing weather, I suppose, but like other resource issues the lack of clear property rights and smoothly functioning markets leads to problems that MAY eventually lead to changes that allow for a more rational market – i.e., better property rights.

pickle March 6, 2008 at 9:27 pm

Hi Greg,

Octane directly correlates to performance. Higher octane means you can have higher compression which gives you more horsepower. Higher octane = Higher Performance. So I dont know exactly what your point is. If your point is Octane is a rating, yes thats true. But the fact is ethanol has a higher octane rating than gas which means you can use it with a higher performing engine. Ethanol is better than gas in every way except that its hard to ignite.

max March 15, 2008 at 2:33 pm

ethanol is a good thing if you have the cars and truck to burn it correctly. there is a ehtanol plant 20 miles from where i live. not only does it help the farmers that plant corn but it helps the farmers that have cow, pig and so and so forth. the ethanol plant by where i live reuses the energy by making power for them use there. the water thing yah it takes water to make it but ryan you use water on a daily bases just like me and every other american out there. u probley have a watering sistom on your lawn u probley wash your car. you use water justlike every on

Wanted: Free Market Ethanol May 8, 2009 at 4:32 pm

“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”

-Murray N. Rothbard

This applies equally well to agronomics and agricultural engineering. Mr. McMaken, I assume you really have no idea what you write about. Shame to see the Austrians not hold themselves to the same standards they hold others when discussing economics.

Hasenbeck January 29, 2011 at 2:18 am

hey there and thank you for your information — I’ve certainly picked up anything new from right here. I did however expertise a few technical points using this website, as I experienced to reload the site many times previous to I could get it to load correctly. I had been wondering if your hosting is OK? Not that I am complaining, but slow loading instances times will sometimes affect your placement in google and could damage your quality score if ads and marketing with Adwords. Anyway I’m adding this RSS to my email and can look out for a lot more of your respective intriguing content. Ensure that you update this again very soon..

Dana Woodworth April 23, 2011 at 5:04 am

Looking for a better webhosting solution? Everyone wants to save money, right? I currently have 184 websites and all of them are hosted with Fast Next and I only pay a total of $6.95 per month. If you have never even checked out multi-domain hosting then you really should right now. You get the MultiManager control panel that allows you to create, delete and manage full-featured accounts and control all your sites from one place! Using the Multimanager is very simple, but quite powerful. Just choose one of your sites and go right to the control panel for that particular domain. All servers are fully owned by the company and have been specially tailored for this type of hosting environment. The secure data center for these servers is US based and located just outside New York City. They also have plenty of space for growth so you don’t have to worry about crowding. Simply put, multi-domain doesn’t get any better or any cheaper than this! For just $6.95 per month, you can have everything that you need, all in one place. Check It Out -> http://gourl.gr/g9y

40 LCD November 21, 2011 at 5:12 am

unique article of friends, maybe some of my friends need this article, I would recommend it to them for visiting this blog, my first bookmarks

Comments on this entry are closed.

Previous post:

Next post: