Adam Li Khan: What if Ethanol Didn't Raise Food Prices?

Someone emailed us recently. He wrote, "I talk to a lot of people on the subject of ethanol as a source of fuel and some people get kind of hostile because they think that will make the price of food go up. One couple I know have a hog farm in and they claimed that using corn for making fuel made the price of hog feed go up."

It's the most common objection we get to fuel competition. Ethanol has, in fact, raised corn prices slightly, because the corn is more valuable on the market, which has allowed the government to stop some subsidies. Many people in the food industry do not like this because those subsidies were allowing the food industry to buy corn and its products (for example, high-fructose corn syrup) at less than the market price. So they joined with the oil industry in 2008 in a PR campaign to make people think ethanol will raise food prices and cause starvation.

By far the biggest cause of rising corn prices is rising oil prices, and the oil industry has done an expert job of deflecting attention away from their own culpability and laying the blame on their biggest competitor (ethanol). It has been a brilliant campaign, although underhanded and bad for America. They have successfully misled even people in industries that depend on corn (like those hog farmers).

Having said all that, we really shouldn't bother making ethanol from corn. It's not the most efficient thing to make ethanol out of. The only reason so much of the ethanol in America is made from corn in the first place is that for almost the entire 20th century, farmers had an overproduction problem. They grew too much corn. When there was too much, prices dropped so low that farmers went out of business. Since it's bad for a country's population when its farmers go out of business, the U.S. government has tried many things to prevent it from happening. They could have just told farmers what to grow, but that's pure socialism, and besides, what happens if there's a drought that year? Instead, they tried to find other markets for excess grain. One of the things they came up with is adding ethanol to gasoline instead of lead (gasoline by itself isn't high enough octane to use without the engine knocking, so the oil industry added lead for a long time, but since it is highly poisonous, it was eventually made illegal, so now ethanol is used to raise the octane level).

But many other sources (feedstocks) can be used to make ethanol that are far more productive and efficient than corn. Let me give you some comparisons:

Wheat: 277 gallons per acre
Corn: 354 gallons per acre
Sweet Sorghum: 374 gallons per acre
Sugarcane: 662 gallons per acre
Sugar Beets: 714 gallons per acre
Switchgrass: 1,150 gallons per acre

Sugar beets and switchgrass both require less fertilizer than corn. Researchers have created a genetically-altered strain capable of increasing switchgrass’s massive ethanol yield by another 38 percent!

This doesn’t even begin to cover all the things alcohol fuels can be made from. With gasification technology (heating up organic material until the basic elements separate) we can inexpensively make alcohol fuels from wheat and barley straw, rice bagasse, municipal waste and a variety of agricultural wastes like corn stover (the stalks and husks left over after harvest), sawdust, paper pulp, small diameter trees, etc.

And waste can be made into ethanol.

Ethanol can also be made for $1.50 per gallon right now, without any subsidies, from natural gas or coal, both of which are abundant in the USA and inexpensive.We've got so much natural gas, we're just burning it off to get rid of it (mainly because it isn't able to compete in the fuel market yet — but we're working to change that).

America has plenty of fuels. We simply need to make them available and allow them to compete with each other. Fuel competition will move the United States closer to fuel independence, limit money going to dangerous women-oppressing regimes, lower the amount of lobbying and influence the oil industry enjoys today, revitalize the American economy, drastically improve our national security, help solve our garbage and landfill problem, help people in developing nations rise out of poverty, help prevent mental illness, and reduce the amount of pollution and greenhouse gases that are sent into the atmosphere, into the ocean, and into the ground. And you will be paying significantly less at the pump.