Good news: President Bush and Congress have found an energy policy they can agree on.
Bad news: They both want to expand the use of ethanol.
This week, in fact, President Bush has been busy pushing corn. On Tuesday, he and Energy Secretary Sam Bodman visited the U.S. Postal Service Vehicle Maintenance Facility to see a demonstration of some alternative-fuel trucks. The day before, the president met with Detroit automakers, who urged him to improve consumer access to ethanol.
This mutual enthusiasm for the corn-based fuel may be good for the political environment, but not for the physical one. A new paper by The Heritage Foundation’s Ben Lieberman road-tests the latest boondoggle from Washington and finds that its earth-friendly claims are seriously overblown. So, too, is the notion that using more ethanol reduces oil imports and lowers prices at the pump. Worse, increased ethanol use drives up other consumer costs.
Well, you may ask, does anyone stand to benefit? Sure, Lieberman says: corn farmers and ethanol producers.
The jump in ethanol use certainly didn’t come about because of a groundswell of popular demand; it came about, like so many bad ideas, because of a government mandate. The Energy Policy Act of 2005 required that 4 billion gallons of renewable fuel (mostly ethanol) be added to the gasoline supply last year. It goes up to 4.7 billion this year and to 7.5 billion in 2012. But ethanol lowers fuel economy—according to the Department of Energy, a gallon of ethanol contains only two-thirds the energy content of a gallon of gasoline.
And you’re actually paying more for less performance. It’s difficult, Lieberman notes, to transport ethanol from its Midwestern home base to far-off markets, and that adds to the price you pay at the pump. Ethanol can’t be sent in an energy-efficient way through pipelines like gasoline can, because it would be contaminated by moisture along the way. Ethanol must be shipped instead by trucks, barges and railroads.
And that brings us to ethanol’s environmental impact. After all, shipping by truck, barge or rail uses … well, fossil fuels. So the more ethanol we move, the more fossil fuel we use—which, Al Gore and Company tell us repeatedly, spews the greenhouse gases that contribute to global warming. In addition, all that extra corn farming means more fertilizer and pesticide use, along with increased irrigation. More diesel fuel will be needed to run the tractors and the harvesters.
In the end, Lieberman concludes, ethanol may wind up putting about as much carbon dioxide into the air as it takes out. So, from an environmental perspective, we’ll be paying more to more or less maintain the status quo.
The problems with ethanol don’t end there, though. The congressional mandate to put ethanol in the pumps also pumps up your grocery bill. As Lieberman writes:
“Ethanol use at current levels has also led to skyrocketing corn prices as the available supply is split between food and fuel uses. This has led to higher prices for corn products and things such as corn-fed meat. The U.S. Department of Agriculture predicts that the ethanol mandate will continue to apply upward pressure on food prices in the coming years. Even the price of tortillas, the dietary staple of many low-income Mexicans, has been affected.”
Faced with these facts, you might think that lawmakers would be scrambling to repeal the ethanol mandate. Instead, they’re planning to expand it. The president has announced that he wants to increase it nearly fivefold, to 35 billion gallons by 2017, and ethanol supporters in Congress are ready to follow suit. That’s music to the “ears” of corn farmers, who also profit from tariffs that limit ethanol imports, such as sugar-derived ethanol from Brazil—which, Lieberman says, is produced more efficiently than the corn-based variety.
Of course, domestic corn production can’t really support such a large boost in ethanol production, so President Bush has promised more money for “cellulosic” ethanol, which is made from wood chips, grasses, agricultural waste and other plant materials. But as Lieberman points out, the track record for federally-directed research into alternative energy isn’t good.
Has Congress forgotten the Carter-era experience with “syn-fuels,” a costly federal program to make motor fuels from coal? Not surprisingly, it was a complete failure. “If past experience with Washington’s attempts to choose alternative-energy winners and losers is any guide,” Lieberman writes, “cellulosic ethanol will fall considerably short of the current hype.”
If Congress and the president truly want to help, they should get out of the fuel business altogether. Repeal the tariff on ethanol imports and the ethanol mandate. Let the free market decide which green-friendly fuel policies prevail. Because when it comes to energy policy, ordinary Americans are the ones who belong in the driver’s seat.
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