The View From 1776
Wednesday, July 11, 2012
The Superficiality Of Liberal-Progressive Economics
The beauty of liberal-progressive policies is almost always only skin deep. When ivory tower intellectuals come up with a new policy idea, liberal-progressives’ knee-jerk reaction, without concern for ramifications, is, “That sounds great! Let’s impose it on the whole world.”
A reader posted this comment:
Please check your ideas before you cite them as “facts”! Only a small amount of petroleum is used to make a gallon of ethanol. The ratio is about 1 gallon of tractor fuel for 20 gallons of ethanol.
The total energy balance (counting all the energy inputs in manufacturing ethanol) is less favorable, but still a clear winner. Ethanol production saves about 35% when the total process is considered.
These data are widely available, but here is one site for checking:
The link the reader provides is one from the U. S. Department of Energy, the cabinet-level department created in 1977 by President Jimmy Carter to promote the development of alternative energy sources that could make the United States energy-independent. In other words, what is reported on its website is a puff piece, a piece of deceptive horn-blowing to justify its useless existence.
The department’s annual budget today is approximately $6 billion. Adjusted for inflation, roughly the same amount has been spent annually over the past 35 years, with zero practical result. Only a devotee of the mythology of socialism could believe anything emanating from the Department of Energy. In the real world where expenditures of scarce resources must have economic justification, the Department of Energy is a joke.
Looking a little deeper than liberal-progressives are wont to do, to understand the true cost and extensive waste in producing ethanol, it’s necessary to add an array of other fossil fuel usage in producing ethanol.
David Pimentel, Cornell professor in the College of Agriculture and Life Sciences, reports that:
* An acre of U.S. corn yields about 7,110 pounds of corn for processing into 328 gallons of ethanol. But planting, growing and harvesting that much corn requires about 140 gallons of fossil fuels and costs $347 per acre, according to Pimentel’s analysis. Thus, even before corn is converted to ethanol, the feedstock costs $1.05 per gallon of ethanol.
* The energy economics get worse at the processing plants, where the grain is crushed and fermented. As many as three distillation steps are needed to separate the 8 percent ethanol from the 92 percent water. Additional treatment and energy are required to produce the 99.8 percent pure ethanol for mixing with gasoline.
* Adding up the energy costs of corn production and its conversion to ethanol, 131,000 Btu are needed to make 1 gallon of ethanol. One gallon of ethanol has an energy value of only 77,000 Btu. “Put another way,” Pimentel said, “about 70 percent more energy is required to produce ethanol than the energy that actually is in ethanol. Every time you make 1 gallon of ethanol, there is a net energy loss of 54,000 Btu.”
* Ethanol from corn costs about $1.74 per gallon to produce, compared with about 95 cents to produce a gallon of gasoline. “That helps explain why fossil fuels—not ethanol—are used to produce ethanol,” Pimentel said. “The growers and processors can’t afford to burn ethanol to make ethanol. U.S. drivers couldn’t afford it either, if it weren’t for government subsidies to artificially lower the price.”
* Most economic analyses of corn-to-ethanol production overlook the costs of environmental damages, which Pimentel says should add another 23 cents per gallon. “Corn production in the U.S. erodes soil about 12 times faster than the soil can be reformed, and irrigating corn mines groundwater 25 percent faster than the natural recharge rate of ground water. The environmental system in which corn is being produced is being rapidly degraded. Corn should not be considered a renewable resource for ethanol energy production, especially when human food is being converted into ethanol,” Pimentel said.
* The approximately $1 billion a year in current federal and state subsidies (mainly to large corporations) for ethanol production are not the only costs to consumers, the Cornell scientist observes. Subsidized corn results in higher prices for meat, milk and eggs because about 70 percent of corn grain is fed to livestock and poultry in the United States. Increasing ethanol production would further inflate corn prices, Pimentel said, noting: “In addition to paying tax dollars for ethanol subsidies, consumers would be paying significantly higher food prices in the marketplace.”
Wall Street Journal, June 3, 2009, Ethanol’s Grocery Bill.
The biofuels industry already receives a 45 cent tax credit for every gallon of ethanol produced, or about $3 billion a year. Meanwhile, import tariffs of 54 cents a gallon and an ad valorem tariff of four to seven cents a gallon keep out sugar-based ethanol from Brazil and the Caribbean. The federal 10% blending requirement insures a market for ethanol whether consumers want it or not—a market Congress has mandated will double to 20.5 billion gallons in 2015.
The Congressional Budget Office reported last month that Americans pay another surcharge for ethanol in higher food prices. CBO estimates that from April 2007 to April 2008 “the increased use of ethanol accounted for about 10 percent to 15 percent of the rise in food prices.” Ethanol raises food prices because millions of acres of farmland and three billion bushels of corn were diverted to ethanol from food production. Americans spend about $1.1 trillion a year on food, so in 2007 the ethanol subsidy cost families between $5.5 billion and $8.8 billion in higher grocery bills.
A second study—by the Environmental Protection Agency’s Office of Transportation and Air Quality—explains that the reduction in CO2 emissions from burning ethanol are minimal and maybe negative. Making ethanol requires new land from clearing forest and grasslands that would otherwise sequester carbon emissions. “As with petroleum based fuels,” the report concludes: “GHG [greenhouse gas] emissions are associated with the conversion and combustion of bio-fuels and every year they are produced GHG emissions could be released through time if new acres are needed to produce corn or other crops for biofuels.”
For more examples of liberal-progressive superficiality, read Thomas Sowell’s The Truth About Government ‘Job Creation’