US ethanol policy pits growers against each other while consumers are squeezed at the gas pump and grocery store aisle.
Pitting farmers against farmers is just one of the negative consequences of U.S. policy that mandates that gasoline be blended with ethanol here in the United States.
From a California perspective, where there is a reliance on corn-based commodities for livestock feed, pouring corn into an auto fuel refinery has done great economic damage to an agriculture industry wrought by abysmally low prices. For instance, the California dairy industry is hemorrhaging in large part because of high feed costs.
In an editorial, the USA Today links federal mandates for increased use of ethanol with a continued hike in food prices to consumers. True. Anything corn based and just about everything else has risen precipitously since Congress got the bright idea to require ethanol (made primarily from corn) and other biofuels as a way to reduce U.S. dependence upon foreign oil.
For farmers and ranchers that has meant high feed costs across the board, and in an odd twist, artificially higher fuel costs, which they also must bear with the rest of us.
Because new cars are more fuel efficient anyway, U.S. consumption of gasoline is down, the USA Today editorial says. Certainly the lousy economy has had its roll in this. Now refiners are engaged in a shell-game of trading credits (think carbon credits), which the newspaper says is fueling speculators and keeping gas and diesel prices artificially high.
A Fox News report in May quoted the American Automobile Association (AAA) saying that higher ethanol blends in gasoline is damaging cars. The current 10 percent ethanol blend is quickly becoming a 15 percent blend, which auto makers say is corrosive to fuel lines and other parts. With the exception of the small number of flex fuel vehicles that can burn an 85 percent blend of ethanol, AAA says the typical car warranty will be voided if ethanol blends higher than 10 percent ethanol are used.
In contrast, proponents of ethanol cite NASCAR’s use and endorsement of ethanol as a shining example of a program that works, even though they had initial problems with the fuel. How many automobile owners have teams of highly-specialized mechanics and the ability to buy highly-specialized parts to change out daily to keep their cars running at peak efficiency?
So while some corn growers and their lobbies are riding in tall cotton, their counterparts who need to feed that to livestock are staring at empty pockets while the world suffers through higher food costs and America continues to be squeezed at the gas pump.