Trading Dependencies
Posted by Keith_Indy on 25 Jun 2007 at 1:53 pm | Tagged as: Technology, Keith's Page, Developmental economics, Environment, Economics, Domestic Politics
Instapundit links to an article in Reason about how the increased production of ethanol is leading to higher prices for food.
I also think it could lead to increasing reliance by America on foreign grain. Which, as we saw with the pet food recall, could mean a riskier supply. You can poison grain, but you can’t poison oil…
Congress evidently believes that American energy independence depends, in part, on turning massive quantities of food into fuel. The energy bill being debated in the Senate would mandate that 36 billion gallons of ethanol be produced for transport fuel by 2020. President Bush is more or less on board since he proposed a 35 billion gallon mandate in his last State of the Union speech. This is on top of the 2005 requirement that 7.5 billion gallons of ethanol be produced by 2012. Almost one-third of the U.S. corn crop will be used to produce ethanol in 2012.
Some energy hawks might argue that breaking our dependence on foreign oil is worth higher food prices. After all, on average Americans spend about 10 percent of their incomes on groceries. Doubling that would bring us back to the good old days of the 1950s when families spent about 20 percent of their incomes on food. Doubled food prices would not mean mass starvation for Americans. However, our biofuels frenzy will not only starve oil despots of cash, but it could end up literally starving millions in poor countries.
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