Congress Discovers Ethanol’s Unintended Consequences
May 1st, 2008 at 8:45 pm
May 1st, 2008 at 8:45 pm
Rarely do we see Congress admitting it made a mistake. This may be as close at it gets, found in The Washington Times:
“The view was to look to alternatives and try to become more dependent on the Midwest than the Middle East. I mean, that was the theory. Obviously, sometimes there are unforeseen or unintended consequences of actions,” (House Majority Leader Steny H.) Hoyer, Maryland Democrat, told reporters yesterday.
Rep. Jeff Flake (R-AZ) has been a stalwart free trader and has targeted some things mentioned on NR previously.
“This is a classic case of the law of unintended consequences,” said Rep. Jeff Flake, Arizona Republican, who introduced a bill this week to end the entire slate of federal supports, including the mandates for blended gasoline, the tax credits for ethanol producers, and tariffs that keep out cheaper foreign ethanol.
The Democrats haven’t learned their lesson, instead desiring to move the corn ethanol subsidy to other sources of ethanol production.
May 2nd, 2008 at 6:26 am
Yes, but the price increases in corn which have led to increased food prices are not - in fact - the direct result of a turn towards ethanol. They are the result of increased speculation on the commodities markets which have driven up corn futures. That speculation is driven by the MSM.
Put simply, there is NO SHORTAGE of corn for the food markets. (Or soy, for that matter). In fact, corn production is up 34% since 2002, and that’s after accounting for the portion that is earmarked for ethanol.
Unfortunately, this fear about rising corn prices is driven by Malthusian discontents (i.e., the over-population fear-mongerers) who do not want to see a successful new market for energy production created. More energy means more population sustainability.
Furthermore, the anti-globalization wingnuts oppose any U.S.-specific market which produces more energy than it consumes. If the U.S. were to decrease its energy dependence (or, God forbid!) actuallky become energy independent, third world nations would suffer (according to these people, not me). The one commodity (natural resources in fossil fuels, or renewable fuels) that many third world countries have would become irrelevant to U.S. markets, thereby reducing demand and softening prices, and thereby undermining the economies of said third-world countries.
There is acutally a small kernel (pardon the pun) of truth to this, and its something that the U.S. has to be politically aware of. To wit, yes, the U.S. would likely be less interested (economically) in the commodities these countries have to offer. But that doesn’t mean that they (the 3rd world countires) wouldn’t have a market to sell to. There will always be India and China. The downside of energy independence for the U.S. is that the third world countires will build stronger ties to China and India, thereby creating a politco-economic consortium from which the U.S. has voluntarily (although inadvertantly) excluded itself. In this scenario, energy independence isn’t such a good thing.
What a tangled web we weave…
May 2nd, 2008 at 6:35 am
Oh, I forgot where I was going with that… In short, the corn market is over-producing right now. The bottom will fall out in the next one to two years. The market will figure this little blip out. Congress has meddled once. Flake wanting to “undo” the meddling is actaully more meddling, not less. Leave it alone.
What’s sad is that the corn for ‘08 is already in the ground (as of the past two weeks) so famers have already bet their farms (literally, in some cases) on prices staying where they are. If Flake’s bill succeeds, the bottom will fall out this year, the farmers will be left holding the bushel, and they will all blame a Republican.
Talk about unintended consequences.