Mideast Turmoil and the Corn Ethanol Connection
Could ethanol-driven food price increases be at the root of recent unrest in Egypt and the greater Middle East? An article by Robert Bryce in the Energy Tribune explores the connection between the Iowa Presidential Caucuses, ethanol subsidies, and the rising tide of discontent:
This year, the US corn ethanol sector will consume 40 percent of all US corn – that’s about 15 percent of global corn production or 5 percent of all global grain – in order to produce a volume of motor fuel with the energy equivalent of about 0.6 percent of global oil needs. …
The quantity of grain to be consumed this year for US ethanol production – 4.9 billion bushels – boggles the mind. That’s more than twice as much as all the corn produced in Brazil and more than six times as much as is grown in India. Put another way, that’s more corn than the output of the European Union, Mexico, Argentina, and India combined.
Observation: Some people believe that a 0.2% increase in atmospheric carbon dioxide can disrupt global climate. I’m skeptical about that. But it’s altogether believable that diverting 15% of global corn production might disrupt the global economy and lead to mass unrest in the developing world, enough to topple governments.
In recent weeks, we’ve seen food-price hikes and protests that are reminiscent of 2008. There have been food riots in Algeria and Mozambique. Last month, some 8,000 Jordanians protested in the streets of Amman and other cities to protest rising food prices. In Egypt, the world’s biggest wheat importer, wheat prices are up by 30 percent over the past 12 months. This week, protesters took to the streets in India to protest surging food costs..
Politicians of both parties let the Iowa tail wag the energy dog when it comes to corn ethanol subsidies and market mandates:
… President Obama, in his State of the Union speech, said “we can break our dependence on oil with biofuels.” Meanwhile, the Iowa Caucus, the nation’s first presidential primary is now less than one year away. And Newt Gingrich, the former speaker of the US House, who’s dearly hoping that he can be a viable candidate for the 2012 Republican presidential nomination, was recently in Iowa cravenly wooing the ethanol producers and slamming “big city” critics of the ethanol industry. Alas, there’s little reason to expect much bravery out of Gingrich’s fellow Republicans on Capitol Hill. Speaker of the House John Boehner recently told reporters not to expect cuts to the ethanol subsidies because they are “not in the discretionary spending pot.”
Outside of corn farmers and Presidential candidates, everyone (including even Al Gore!) seems to realize that corn ethanol is an engineering, environmental and economic disaster. The bad thing about central planning is that when it screws things up, it screws them up on a grand, even a global, scale.
Cross-posted at RedState.com.