Ethanol Raises Food And Gas Prices?

This story from the Yankton Press and Dakotan argues that pouring government money into ethanol only increases the price of gas and food.  The article bases these claims on a study done by the free market Competitive Enterprise Institute.

But according to Smith's study, experts are predicting not only environmental ramifications from increased soil erosion and run-off from increased use of fertilizers, but also unintended economic consequences.

"There's going to be so much pressure to find land to grow corn, that all crops will be pushed up in price. This will raise food prices," Ebell said.

Already, there are signals of discontent among other interest groups as demand for ethanol competes with corn used in livestock feeds and food products. Consumers are the largest affected group and may not be feeling the effects at the supermarkets yet as the costs of ethanol policy are dispersed among millions of people. However, as the prices for food staples increase, that is expected to change.

But beyond the anticipated pressures on the nation's food supply and environment, according to the study, the greatest misconception with ethanol is that it will lead to a decrease in gas prices.

"America's vulnerable energy supply, which comes largely from unstable regions like the Middle East and Venezuela, poses not only a dangerous threat to our nation security, but is driving gas prices to record prices across the country," Thune said.

But Ebell said the problem with ethanol is that it will never be produced more cheaply than gasoline.

"ADM has done a very good job of convincing the public that, if we replace gasoline with ethanol, it will lower the price of gas. But the experts who have studied this are pretty unanimous in their findings that it will raise the price of gasoline, not lower it," Ebell said.

"The USDA estimates that it takes three-quarters of the energy in a gallon of ethanol to produce that gallon of ethanol," he said. "The energy inputs are very high and most of them come from petroleum."

Diesel tractors and combines used for corn production, and ethanol plants powered by natural gas or electricity from coal-fired power plants are factors that ardent biofuel proponents don't like to factor into the ethanol equation.

"And you can't pipe ethanol," Ebell said. "It has to be trucked, and there are significant energy inputs just getting ethanol from the plant to the oil refineries."