End the Ethanol Madness

This is a very good article on the issue of the ethanol mandate.  This whole issue is heightened by the the worst drought in corn belt states in over 50 years.  It is very questionable if there will be enough corn in this years harvest for both gas and food, particularly if the drought lasts much longer.  That is already causing food products made from corn or dependent on corn, such as animal feed, to start sharply increase in price.  I have a hunch this issue will get much uglier before it gets better.  There is growing pressure on Congress to reign in the EPA on their ethanol mandate to ease the pressure on food prices.

"Pete"
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July 24, 2012
End the Ethanol Madness
By Jeffrey Folks


Economists are warning that the current drought in the Corn Belt is going to result in higher food prices.  That increase will hit consumers hard, reducing discretionary spending and further weakening an already fragile economy.  With every scorching day that passes, the catastrophe mounts.  But, as usual, the president is AWOL.  There's not been one word from Obama about how to address a food crisis that everyone knows is coming.
There have been Midwestern droughts from time immemorial, some of them (like those of the 1930s and 1956) as bad as or worse than present one.  And no one -- not even a president who thinks government should get credit for everyone else's success -- can perform a rain dance and make the drought go away.  But there is one thing the president can do to alleviate the effects of the drought: suspend the nation's ill-conceived ethanol program.


That program now burns up 40% of the U.S. corn crop.  If he had exercised leadership, Obama could already have taken action to suspend ethanol mandates.  That action would have spared 320 million Americans higher food prices this fall and helped to rescue the economy from further decline.  Obama keeps saying he is focusing on jobs like a laser, but now, when he has a chance to actually do something about it, he can't even be located.  He's off in Toledo or Roanoke or dining with Anna Wintour, where he probably was not thinking about food inflation.  He doesn't even seem to know that the American people are hurting -- "the private sector is doing fine."  Yeah, right.


How bad is the damage to America's corn crop?  The situation gets worse every day, but current estimates are that 20% of the crop may be lost.  The price of corn futures is up nearly 50% since the end of May, along with surging prices of soybeans, wheat, and other basic agricultural commodities.
In the face of this, the Obama administration has its head stuck in the sand.  Agriculture Secretary Vilsack refuses to acknowledge any significant impact of the drought on food prices.  If prices are rising, it's the result of "unfair practices," he said.  Or it's the fault of energy prices (which have actually come down 27% from recent highs).  Vilsack has actually offered to perform a "rain dance," if he can come up with one, to alleviate the drought.  That seems to be about all this administration is capable of.


As for the president, he has steadfastly ignored the impending crisis.  He probably figures that in the run-up to the election, voters do not need to be advised that his party's ethanol policies have been responsible for food inflation.  When he is not ignoring the problem, he is lying about it, with his administration refusing to deny that climate change is responsible for the present localized weather conditions.  Yes, George Bush's failure to sign the Kyoto Climate Accord is responsible for the present drought.  Bush caused this year's drought (and those of 1988, 1956, and 1936 as well).  He also caused the global warming of the Medieval Climate Optimum (950-1250 AD) and the frigid temperatures of the Little Ice Age (1350-1850).
The crucial point is that Obama's environmental policies have put the country's food supply at risk.  Anyone with common sense knows that burning 40% of the nation's corn crop (and proposing to burn the entire crop, as increasing mandates would do) to satisfy ethanol mandates is madness.  Yet Obama has consistently supported the ethanol program along with impractical mandates for biofuel and other alternatives.


The risk posed by ethanol mandates was apparent even before the current drought set in.  Corn reserves were low at the beginning of the season, and now they are almost nonexistent.  The administration should have anticipated the possibility of a drought, since droughts are a regular occurrence in the Corn Belt.  Instead, the president was out there raising money from environmental donors at George Clooney's home, a thousand miles away from reality.


Now reality has set in, and the American people will pay for it.  Economists are predicting that the wholesale price of milk (already up 15% in the last 6 weeks) will rise 23% by year's end.  Prices for meat, poultry, and eggs are set to rise dramatically as well.  As these price increases filter down and spread throughout the economy, they will set off further inflation.  Obama is calculating that these price increases won't become an issue until after the election.  After that, as he told then-Russian President Medvedev, he can be "more flexible."  In other words, after the election he doesn't care what Americans pay for a gallon of milk.  Just don't talk about it 'til then.  


Maybe that's why Secretary Vilsack is telling the public that the drought will have no effect on food prices despite all the evidence that it already has.  After all, corn is a fundamental ingredient in a host of food products.  If the drought continues, a lot more than 20% of the crop may be gone, and the effect on food prices will be a lot more than Vilsack's prediction of 0.1%.
The average two-earner household spends $12,258 a year on food.  In 2011, food inflation was 4.8%.  Double that to 10%, and that would be $1,226 that consumers won't be able to spend elsewhere.  That's a $150-billion hit to the economy.  At a time when unemployment is running 8.2% and the economy is growing by less than 2%, the nation cannot afford a $150-billion hit.


A bit of leadership from Obama could save Americans from this senseless damage.  Of course, it might cost him campaign donations from ethanol producers, it might cost him support in Iowa, and it might even make George Clooney mad.  But a great man would rise above these considerations, take action on behalf of the American people, and let the political chips fall where they may.  Obama is not a great man.  He is a small-minded, calculating politician who always puts his own interest above that of the country.    
Now is the time to suspend the ethanol program.  Better yet, end it entirely, and let consumers decide whether they want to put corn in their gas tanks.


Read more: http://www.americanthinker.com/2012/07/end_the_ethanol_madness.html#ixzz21YzdmUmK