Corn prices have more than doubled in the past two years, contributing to sharp rises in the price of virtually everything in the American economy. Obvious products like corn flakes and meat arenâ€™t the only commodities affected. Soda, beer, motor vehicle fuel, medicines and even car parts rely on corn-based substances in their production.
Ethanol-based fuel gets fewer miles per gallon than petroleum based gasoline, and some argue that ethanol, though touted as a â€œgreenâ€ fuel, actually produces more greenhouse gas emissions than conventional fuel.
In June, US Senator and candidate for president, John McCain said â€œSupport for corn-based ethanol has been a case study in the law of unintended consequences.â€Â
The national Republican Party revised itâ€™s platform last week during the national convention calling for a reversal of the energy bill signed by president Bush that mandates a five-fold increase in ethanol production and provides additional government subsidy. The new platform plank says the US government should end ethanol mandates and let the free market work.Â
McCain says he didnâ€™t push for the platform change, but supports it. He pointed out that ethanol mandates have led to â€œdistorted food markets through crop land competition,â€ and are â€œdepriving America of better and cheaper fuels.â€
For his part, presidential candidate Barack Obama says he “strongly supports ethanol subsidies.”
President Bush, in defending the policy suggested that new technology might come along that will allow economical production of ethanol from other biomass, like wood chips or switchgrass. Heâ€™s counting on the development of currently non-existent technology within the next nine years to meet the demands of the energy bill he signed in December and federal dollars are being invested in that research. Presently, not a single commercial US refinery is producing ethanol from anything but corn.
Failing the development of the theoretical new technologyÂ within a decade will leave US energy law in the precarious position of mandating something that is not physically possible. There is not enough corn farmed to meet the demands of the energy bill. As the forces of reality inch closer to currently unattainable ethanol mandates in the coming years, the price of virtually everything is likely to rise even more sharply than the preceding two years. Supply simply cannot meet the artificial demand imposed by government.
Minnesota governor Tim Pawlenty has been leading the charge for increased ethanol mandates. During his tenure as chairman of the National Governorâ€™s Association, he advocated increased ethanol usage nationally and in 2005, he signed a law doubling Minnesotaâ€™s ethanol mandate from 10% to 20% by 2013. â€œOnly people on the far margins of the political spectrum oppose ethanol,â€ he said.
Minnesotaâ€™s increased ethanol mandate will not take effect unless a waiver can be obtained from the US Environmental Protection Agency.