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The Conference Board Review® Article
A Promise Not Kept
The case against ethanol.
By Robert Bryce
Robert Bryce is managing editor of Energy Tribune and a contributing writer for the Texas Observer. He can be reached via www.robertbryce.com. Adapted from Gusher of Lies: The Dangerous Delusions of "Energy Independence" (PublicAffairs). ©2008
Ethanol isn't motor fuel. It's religion. America is divided into two camps — the believers and the heretics — and so far, unfortunately, the believers appear to be winning.
Just as priests prefer to ignore science when it comes to matters of faith, ethanol boosters prefer to ignore the science that undermines their chosen motor fuel. That religiosity is best summarized by Iowa State University political scientist Steffen Schmidt, who told me that ethanol "is kind of like apple pie. It's almost like a patriotic fuel." There appears, he said, to be a belief "that ethanol is morally better than oil."
It's this religious fervor that keeps the ethanol scam alive and well and fleecing American taxpayers.
The irrational exuberance over corn-derived ethanol has led investors to dump bushels of cash into the companies that produce ethanol. Silicon Valley venture capitalist Vinod Khosla has pumped millions of dollars into ethanol production schemes, claiming that ethanol will be the "first step" on America's "trajectory to energy independence." But Khosla and his fellow investors are choosing to ignore the many problems faced by the ethanol business. The hard truth about energy in general — and biofuels in particular — is that biofuels can be just as expensive and just as destructive as fossil fuels. In fact, they are almost certainly more expensive and more destructive.
As Milton Friedman declared, there's no such thing as a free lunch. Everything in the energy business comes with a cost. And when it comes to ethanol, the costs are enormous, a fact that has led Agribusiness Council president Nicholas Hollis to declare that "ethanol is the largest scam in our nation's history."
Trading Food for FuelIn the eighteenth and nineteenth centuries, the U.S. economy was primarily based on carbohydrates. For most people, horses were the main mode of transportation. They were also a primary work source for plowing and planting. Aside from coal, which was used by the railroads and in some factories, the U.S. economy depended largely on the ability of draft animals to turn forage into usable work. America's farmers were solely focused on producing food and fiber. And while the United States was moderately prosperous, it was not a world leader.
Oil changed all that. After the discovery of vast quantities of oil in Pennsylvania, Texas, Oklahoma, California, and other locales, America was able to create a modern transportation system, with cars, buses, and airplanes. That oil helped the United States become a dominant military power. Humans were freed from the limitations of the carbohydrate economy, which was constrained by the amount of arable land. Today's hydrocarbon-based economy has made America's arable land far more productive by allowing farmers to cultivate their land more intensively and concentrate on growing food rather than fodder.
In short, hydrocarbons were a critical ingredient in making the United States into one of the world's most prosperous countries.
But ethanol proponents long for a return to the old days, one in which the vagaries of rainfall and periodic drought will determine whether or not America's transportation system has the fuel that it needs. A severe, years-long drought in Iowa or Illinois or other key corn-producing states could devastate America's ethanol industry, and the United States would have no choice but to make up for any shortfall in ethanol production by importing more oil. While the effects of weather-related calamities are rarely discussed, neo-Luddite energy isolationists are purposely ignoring an even more fundamental question: Should America's farms be producing food or fuel?
Comments? Write a letter to the editor.
Return to the May/June 2008 The Conference Board Review® issue.
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