In the competition of ideas that is so vital to democracy, studies by supposed experts, preferably disinterested, figure prominently. So does the selective use of facts from these studies by groups less disinterested.
As the US systematically suppresses market influence in energy choice, deception born of selectivity increasingly distorts policy discussions. This is because suppliers of energy unable to compete in markets must compete instead in the political arena for tax favors and mandates. Without rival in this practice is the politically triumphant but economically beleaguered ethanol industry.
Food and fuel
Ethanol took a public relations pummeling early last year when food prices zoomed. As it became clear that grain prices had jumped in partial response to corn use related to the production of fuel ethanol, the wisdom of burning food for fuel came under belated question. So the ethanol industry revved up its well-oiled propaganda machinery. Its message, clearly fashioned to exploit the oil industry’s abysmal standing in popular opinion: Skyrocketing energy prices pushed up food prices more than did fuel made from corn.
The statement was true as far as it went. It also was irrelevant to questions about ethanol.
Energy prices jumped to extraordinary levels because of unusual market gyrations beyond anyone’s control. How could they not push up food prices? But energy prices didn’t jump because of an act of Congress. Furthermore, energy prices inevitably subside when market strains relax and have done so with a vengeance since the middle of last year. Demand for ethanol, however, will continue to rise, keeping upward pressure on grain and therefore food prices. The reason is an act of Congress. Unlike market gyrations, people have direct control over acts of Congress.
Ethanol’s propagandists, who never make distinctions like these, have brought strategic selectivity to bear yet again in response to a new Congressional Budget Office report on ethanol’s effects on food prices and greenhouse gas emissions. The Renewable Fuels Association began a press statement by quoting a sentence from the report’s summary observing that during April 2007-April 2008, “certain other factors—for example, higher energy costs—had a greater effect on food prices than did the use of ethanol as a motor fuel.” This finding, RFA argues, shows that “ethanol’s role in food price increases is minimal.”
How minimal? “The CBO report finds that ethanol contributed just ‘0.5 and 0.8 percentage points of the 5.1% increase in food prices’ from April 2007 to April 2008,” RFA says. That certainly sounds minimal.
But the quote lifted by RFA had more context than RFA chose to report. In the study period, CBO said, “the increasing demand for corn to produce ethanol contributed, in CBO’s estimation, between 0.5 and 0.8 percentage points to the 5.1% increase in the price of food overall as measured by the component of the consumer price index for all urban consumers (CPI-U) that measures food prices.” Anticipating confusion, CBO helpfully translated the economic jargon into terms meaningful to people who buy food—in the very next sentence, no less: “That is, the growing use of corn for ethanol accounted for about 10% to 15% of the increase in the CPI-U for food over the April-to-April period.” RFA didn’t see fit to report the translation.
More to come
So, yes, energy prices over which no one has control pushed up food prices in the study period—more so, in fact, than did ethanol mandates. But while energy prices have plummeted, ethanol mandates remain in effect. In fact, they—and their one-way influence on the price of food—will escalate—by act of Congress.
“As mandated use of biofuels rises over time,” the CBO says, “increased production of ethanol and biodiesel will probably continue to push up prices for corn and soybeans.” That sentence, with its implications for food prices, didn’t find its way into the RFA statement, either.
Congress can constrain food prices by removing the ethanol mandate. It might actually consider doing so if enough Americans come to recognize what’s happening to them and learn how to treat the ethanol industry’s self-serving pronouncements.
