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Soberly Weighing Advantages Of Higher Ethanol Consumption

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The Tampa Tribune

Published: March 18, 2008

The honeymoon is over for ethanol, even with oil prices breaking records.

Smart people are questioning the economics of the tax-subsidized fuel. Unfortunately, many of them are asking the wrong questions.

Corn-based ethanol is an imperfect fuel, but producing more of it has benefits too important to discount.

True, its production requires lots of water, land and energy. And using food crops for fuel does raise grocery prices.

By some estimates, ethanol requires more energy to produce than the finished product contains. Economists differ, but the important question is whether ethanol is preferable to gasoline, which also takes a lot of energy to find, refine and transport. Market prices suggest ethanol competes very well.

Ethanol also is considered a water hog. Making a gallon requires four gallons of water, says energy expert Bruce Dale, professor of biobased technologies at Michigan State University. But refining a gallon of gasoline takes 10 to 40 gallons of water.

Environmentalists who have long argued for renewable fuel are now saying that turning food into fuel is wrong.

The Retail Bakers of America complain that ethanol makers burn up our food supply and jack up the price of bread.

The price of wheat has more than tripled during the past 10 months, but bakery goods haven't gone up as sharply. Labor, packaging, advertising, transportation and all the other costs make the price of grain a small factor in the price of bread. Dale calculates the cost of the corn in a box of cornflakes is five cents.

In any case, don't blame ethanol for the soaring price of wheat, corn and other commodities, nor for the rising price of meat. Actually, most corn is eaten by animals. That's why meat prices have risen along with the price of grain. The real villain is the falling dollar.

As the dollar loses value, foreign companies buy more U.S. grain. Wheat exports are up more than 60 percent over last year and are still increasing.

Currently, we taxpayers subsidize ethanol by 51 cents a gallon. In general, consumers are better off when the market sets prices. The political reality is that crop subsidies won't soon be eliminated, so let's see what our money is buying.

The ethanol subsidy cost about $3 billion last year, but the high demand for grain lowered price supports for farmers by $6 billion. And, Dale estimates, the subsidized ethanol reduced the bill for imported oil by $15 billion.

Planting more crops for energy on more land raises environmental questions, to be sure, but much farmland is available, especially here in the South.

The world is growing and using more fuel. Reuben Jeffery III, U.S. coordinator for international energy affairs, estimates total energy demand will increase 55 percent by 2030. Unless our energy habits change, more dollars will be sent overseas to buy more oil.

Ethanol can be made here at home, giving all farmers a potential new source of income.

Last year, Americans used about 21 gallons of gasoline for every gallon of ethanol. Most cars can use a 10 percent ethanol blend, so ethanol production could easily double within the existing system. And until a better fuel is available, it should.

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