Congress Backpeddling on Ethanol

It seems clear now that both the Democrats and the Republicans in Congress are largely coming to the conclusion that they made a big mistake in backing ethanol mandates, subsidies, and exclusionary tariffs. Some aspects of the magnitude of their mistake have only relatively recently become clear such as the fact that there is probably no net energy achieved with the use of farmed plants to create ethanol, with the possible exception of sugar cane grown in some very favorable areas. Another example of recent knowledge is that ethanol use does not likely reduce net pollution when all factors are accounted for. On the other hand, the idea that one-quarter of all corn could be used to create ethanol and that this would not greatly increase the cost of corn, those end products dependent upon corn such as beef, pork, chicken, corn oil, and corn syrup, and of soybeans and wheat as corn was planted in their stead, was ludicrous. This year, 35% of the corn crop may be going to ethanol production.

President Bush is still saying that the ethanol mandates are not barely responsible for the food cost increases. He is disappointingly slow on coming around on this. It is true that corn and other food prices are going up both because of the reduction of supply due to the ethanol mandates and due to a major increase in world-wide demand for better and more food.

Congress has pleasantly surprised me by starting to change course so soon. House Minority Leader Steny Hoyer, Democrat, is not as nimble-minded as he should be, but he is now advocating that the upcoming farm bill, delayed from last year, should reduce the ethanol subsidy. They would also increase the subsidy for cellulosic ethanol. He has said, "Obviously, sometimes there are unforseen or unintended consequences of actions." Imagine a committed socialist allowing that he is not omnipotent! Even that he may have been wrong-headed!

Republicans in Congress actually want now to remove mandates requiring the blending of ethanol with gasoline. Representative Jeff Flake, Arizona Republican, introduced a bill to end all federal ethanol supports, including the requirement to blend it with gas, the tax credits for ethanol refiners, and the tariffs to prevent the importation of sugar cane produced ethanol, primarily from Brazil. He recognizes that our economy does not need big increases in food prices on top of those for energy, such as oil. Senator Kay Bailey Hutchison, Texas Republican, wants to freeze the ethanol mandate for gasoline at this year's level. On Rush Limmbaugh's program, she noted that cattle and pig producers were being hurt badly. Apparently there are a few of them in Texas! Rick Perry, Texas governor, has asked the EPA to allow Texas to use only half as much ethanol in gasoline blends as is required.

Meanwhile, some farmers are asking Congress to put windfall taxes on oil producing companies, claiming that these companies are responsible for driving up their costs. The National Corn Growers Association made the foolish claim that the use of biofuels with gasoline was saving Americans $69 billion a year. Others such as Hillary Clinton are also demagogically calling for windfall profit taxes on the oil companies.