Thursday, May 08, 2008

Economists Blast US Corn Ethanol Program, The "Nicorette Gum of America's Oil Addiction"

VOANews--The U.S. program subsidizing the use of corn for the production of fuel ethanol came under sharp criticism at a Senate hearing Wednesday. Economists told the panel the program leads to higher food prices.

Twenty percent of the U.S. corn crop goes into ethanol production, and corn prices worldwide have increased by 50% over the past year (see chart above, corn prices have increased 3.5 times since 2005, from $1.61/bu. to $5.59/bu.). John Sununu, a Republican senator opposed to farm subsidies, says corn prices have risen in part because America is using increasing amounts of corn to produce fuel for automobiles.

Calling the U.S. ethanol program a disaster, Sununu said it is replete with taxpayer subsidies as both farmers and ethanol producers receive tax breaks from the government. In addition, he said, imports of cheaper sugar-based ethanol are blocked by high tariffs.

Related article from Forbes, "The Ethanol Industrial Complex"

Ethanol, once heralded as the homegrown Nicorette gum of America's oil addiction, is getting a second look from lawmakers suddenly concerned about the unintended consequences of merging the fuel and food markets.

MP: What a great sentence....


At 5/08/2008 7:28 AM, Anonymous Machiavelli999 said...

Knowing that the farm lobby has about 20% of Congress by the balls, the chance that there is any change in policy is close to nil, especially with a Democratic administration and a potential filibuster proof majority in the Senate.

But...I thought the Democratic party cared about the little guy?

At 5/08/2008 7:30 AM, Anonymous Zachary A. said...

It truly remarkable how often “unintended consequences” get overlooked whenever lawmakers decide it is a good idea to get involved and distort voluntary transactions.

At 5/08/2008 8:49 AM, Anonymous Anonymous said...

I bet they screw it up even more by trying to fix the unintended consequences; instead of just doing away with the program and lifting the tariffs.

At 5/08/2008 9:34 AM, Anonymous alex said...

Here's a great editorial on the Farm Bill that appeared in the DC Examiner this morning.

"[The] most expensive and regressive farm bill ever."

At 5/11/2008 10:54 AM, Blogger juandos said...

How wonder how the price of gasoline is impacted by environmental concerns?


Post a Comment

<< Home