Ethanol, The Great Economic Hoax

Ethanol is a hoax and it time to stop it. Currently, ethanol enjoys a $0.51/gal subsidy from the US Government. That subsidy is paid to any refiner that blends ethanol into gasoline. So essentially, the government pays to have the cost of ethanol be $0.51/gal under its true market price.

Now the cost of ethanol does not end there. As a gasoline consumer, you also pay for it at the pump. Today that is about $3.09 per gallon. So for those keeping score at home, that is paying for ethanol twice. However, the cost does not end there. The US Government also supports the price of corn to the tune of over $38 Billion from 1995-2005. That is $127 for every citizen of the US. So that totals three ways you pay for ethanol. Now the payment does not even end there. Since corn is part of the food supply, it also drives up the cost of food when corn is used for fuel.

Currently, corn is trading hands for about $5.50/bushel. Before ethanol mandates, it was trading for about $2.50. In three years the price has over doubled, but that is not the end of it. Because farmers are planting more corn (meaning more acres), there is now less wheat, soy beans and other crops being planted. That means there is actually less supply of those other grains which is driving their price up. Wheat was trading for over $14/bushel today while soy beans are $14.58/bushel. Historically, these grains have sold for about $3-4/ bushel and $7/bushel. Again, tremendous increases in price.

Now these higher prices are driving the price of bread and anything made with wheat (cereal, crackers, gold fish) much higher as are soy products. Now the corn price increase is also driving up the cost of feed grains for meat producing animals. It now costs twice as much to feed chickens, turkeys, pigs, and cattle causing huge price increases for meat. So grain prices are drastically raising the price for food that Americans are trying feed their families.

Now the funny thing about ethanol is that is not a good fuel. It only has about 2/3 the energy content of gasoline per gallon so it drives fuel economy (MPG) down. Furthermore, studies show that is takes about as much energy to make ethanol as it produces as a fuel. This means it is doing nothing to eliminate our dependence of foreign oil since we have to burn diesel to grow the crops and harvest the crops that make ethanol. Another alarming issue is the massive use of water that ethanol production requires. Of course these plants sit no where near good water sources, so the are taking a massive toll on the underground aquifers. This is be a tax that future generations will pay when irrigation and drinking water wells are dry.

Ethanol is a hoax that is being perpetrated by the farm lobby and companies like ADM. A Cato Institute study showed that nearly 40% of ADM's earnings come from government subsidies and a good portion of that is from ethanol. While Americans have a soft spot for farmers, it is time to wake up and stop this madness as it is putting a huge burden on the consumer. If ethanol was a good product, it would stand on its own two feet without government help. Let consumers and the market decide if it is a good fuel, not the government.

Write your congressmen and let them know your feelings about the Ethanol Hoax. If you don't, these politicians will continue to placate the farm lobby and Americans will continue to pay and pay and pay and pay for ethanol.