By Andrew Robbins
CSMS Magazine Staff WriterDo you remember the 1980s? Back then oil lobbyist courted the Washington legislature and together they claimed, “When our federal public land in Alaska is open to oil exploration, America’s reliance on imported oil will end!” Indeed oil surged out of Alaska, but not for the benefit of our citizens. Instead, oil companies profited by pumping oil from Alaska and exporting our oil to Japan. Today, federal and state lobbyists are singing a new song with a familiar refrain, “Production of grain-based alternative fuels, ethanol or biodiesel, will end America’s dependency on imported oil.” Just who do these highly paid lobbyists represent? They stand for the corn and soybean farmers of America; the manufacturers of farm equipment; giant corporations that engineer and sell genetically modified seed, fertilizer, and farm chemicals; and speculators who invest in alternative fuels. The decision to plunge forward with production of alternative fuels is full of controversy. According to University of California studies, grain-based automotive fuels consume more energy than they produce. Researchers have demonstrated it takes 29 percent more fossil fuel (oil and natural gas) to produce corn ethanol than the ethanol returns. The production of soybean biodiesel uses 27 percent more energy than it gives back. Fuel mixed with 10 percent ethanol delivers fewer miles to the gallon than gasoline made from petroleum. Thus, manufacturing grain-based alternative fuel is depleting, at an accelerated rate, a fixed supply of fossil fuel. Despite this irresponsible use of limited resources, higher grain prices reward farmers who plant additional acreage for alternative fuel production. Farming burns petroleum while preparing land, planting, maintaining, harvesting, and transporting grain crops. Furthermore, additional corn production requires the manufacture of more nitrogen fertilizer, which is generated from natural gas. To gain control of the U.S. Senate, both political parties tempt voters in farm states with promises that if elected they will promote the use of ethanol and biodiesel. Yearly, 3 billion federal taxpayer dollars subsidize the alternative fuel program. Additionally, to secure industry for their region, state and local governments provide alternative fuel corporations with financial incentives to construct ‘privately owned’ production facilities. Incentives often include land improvements and multi-year property and income tax abatements. But, there is no free ride. These corporate incentives are paid for by state taxpayers through elevated income and property taxes. In Washington our legislators ignore the sound science that ethanol production requires large quantities of fresh water, expends more fossil fuel than it replaces, and that nitrogen fertilizer runoff is polluting our streams and rivers, and expanding the “dead zone” in the Gulf of Mexico. To protect the domestic ethanol industry, legislators have gone to the extreme of imposing a tariff (additional taxation) on imported ethanol. The recent passage of the lobbyist-influenced Energy Independence and Security Act (EISA) is another failed attempt at independence and security. Ultimately, this legislation creates fuel shortages. Oil refiners are now reluctant to invest billions of dollars in new refineries. In the future there will be a shortage of gasoline, and that shortage will be the direct result of alternative fuel legislation. The production of alternative fuels already competes with food grains. Corn and soybeans are basic ingredients for U.S. food producers (edible oils, meat, dairy, eggs, cereal, sweetener, etc.). The EISA raises domestic food prices and opens the floodgates for imported groceries. For fixed income and minimum wage families rising food and fuel prices are disastrous. China’s view of alternative fuel is significantly different than the U.S. As our government lowered the federal funds rate (thereby reducing interest rates) that action devalued our dollar and made this year’s abundant corn and soybean harvest cheap for the rest of the world. China seized the opportunity and aggressively began purchasing and stockpiling U.S. grain. U.S. exports ration our supply of domestic grains and ultimately force U.S. food manufacturers to pass along their higher prices at the grocery stores. The Chinese understand food shortages and how they result in revolution and change in leadership. They choose a different path in their search for alternative fuel sources. To feed their poor and avoid revolution, the Chinese place greater emphasis on nonfood source technologies such as switchgrass, wood products, animal fats, windmills, and solar exploration. When compared to corn-based ethanol, the U.S. biodiesel industry has not performed well. Last year, farmers planted more corn and fewer soybean acres. The competition between grain exports and food versus alternative fuel drove the price of soybeans abnormally high. The price of soybean oil soared above the price of diesel, and biodiesel priced itself out of the market. Yet in 2007, U.S. corporations dumped 250 million gallons of biodiesel on the European market. Déja vu 1980s! First the rallying talk of energy independence and then energy shipped to another country. Clearly, lobbyists do not provide solutions to America’s problems. Lobbyists, aided by federal and state legislators, expedite the transfer of taxpayer dollars from the treasuries to the special interest groups that employ them. Supply and demand attempt to drive our capitalistic economy, but they are often at odds with the special interest agenda. Ultimately, responsibility for failed federal and state policies and America’s broken dreams come home to you, the voter.Also see Home Ownership and the Housing Market (Part 1)Also see The Interest Rate CutNote: Andrew Robbins is the author of It Took My Breath Away: One Man’s Experience May Save Your Life. He can be reached by email at: [email protected]
