End the ethanol boondoggle
Soon after Putin launched his invasion of Ukraine, global commodity prices for staples like wheat and sunflower oil (both major Ukrainian exports) began to rise and the possibility of global food shortages rose with them.
Which brings us back to the U.S., where, for many years, the federal governments has mandated and subsidized the use of basic food stock like corn into ethanol as a fuel additive.
Writing in City Journal, James Meigs says the Biden administration could end the commodity spike and any possibility of shortages. All it would take is suspending (and eventually repealing) the food-to-fuel boondoggle, which acts as a hidden tax on food, while severely distorting food production:
Today, roughly one-third of U.S. soybean oil production is used to make biofuels. Corn-based ethanol has an even bigger footprint. Virtually every gallon of gasoline sold in this country contains 10 percent ethanol, the maximum allowed by law. (A small number of gas stations also sell E85, an 85 percent ethanol blend that can only be used in specially designed engines.) Growing the corn to make all that ethanol requires a staggering 38 million acres, an area larger than the state of Illinois. If used to grow food for human consumption, Loyola writes, that acreage could feed 150 million people.
By diverting about 40 percent of the U.S. corn crop to ethanol production, the RFS program drives up food prices across the board. Since corn is a critical livestock feed, higher corn prices have inflated meat prices. The cost of ground beef has climbed almost 100 percent since the program began. Wheat and rice prices have also gone up as many farmers shifted to growing corn instead. As Loyola concludes, “The ethanol program functions as a hidden food tax—the most regressive of all taxes.” Those effects are felt not just in the U.S., but around the world.
Ending this program – to fight inflation, lower gas prices, and help avoid a global food crisis – should be at the top of the Biden “to do list”:
Eventually, Congress will need to reform—or, better yet, scrap—the entire program.
Whatever the political challenges, reforming the RFS program is the right thing to do. “RFS is a misuse of hyper-productive American agricultural land,” Smith says. “Food inflation domestically and the potential for food shortages in other countries should make it obvious that agricultural lands should be used to produce food.” This would be a good time for President Biden and his team to remember that Obama-era mantra: never let a crisis go to waste.
The question is whether Mr. Biden’s inclinations are to keep using American crops as fuel, and continuing to beg despots to pump more crude….or ending the food-to-fuel boondoggle. Seems obvious, right?