Congress has decided to suspend debate on the Energy Bill for unknown reasons. The Senate and House of Representatives each passed differing versions of the Energy Bill and they are supposed to be in conference compromising the two versions. This hasn’t happened, and that may be a good thing.

You may now be wondering what is in this Energy Bill.

Some of the items included in the bill are:

1        CAFE standards, which reduces the size of cars in order to get better fuel efficiency.

2        Mandates Increased Ethanol production.

3        Increased tax subsidies for Ethanol production.

The video below is Ben Lieberman discussing the associate costs and consequences for passing an energy bill that goes in this direction.

That isn’t the whole of it. There are some major issues and concerns with the ethanol mandates in general. Here are some more facts to ponder:

1.      America’s energy policy has been on an ethanol binge for a while now.

a.       The 2005 energy bill contained the first-ever requirement that these fuels be mixed into the nation’s gasoline supply.

b.      Beginning in 2006 the mandates came on top of massive subsidies and tax breaks already enjoyed by domestic ethanol producers.

c.       The mandate quickly proved to be a mistake – raising rather than lowering fuel costs and sparking food price inflation. These mandates have invoked environmental opposition.

d.      America is now committed to 9 billion gallons of renewable fuels in 2008 and 36 billion gallons by 2022.

e.       For the next few years almost all of this mandate will be met by corn ethanol.

2.      The anger over the high cost of gasoline was the main impetus behind the 2005 and 2007 energy bills, and their successively higher ethanol mandates.

a.       Congress and the public have mistakenly assumed that ethanol is cheaper but the reality is beginning to hit home.

b.      When everything is taken into account (lower fuel economy; increased food prices; and increased tax subsidies) people wonder why ethanol had to be mandated in the first place.

c.       The charts below show an AAA calculation of the national average for the different types of fuel used by automobiles on the highways.

National Unleaded Average

12 Month Average For Regular Unleaded

AAAFuel Gauge data may be used on a daily basis by news media Web sites, but should include attribution to AAA, the display of AAA's logo and a link to www.aaa.com. AAA's logo can be found in the "About AAA" section of the AAA NewsRoom.

3.      The Food Inflation Aspect

a.       Prior to the mandate the price for corn was holding pretty steady at slightly more than $2 per bushel.

b.      The price of corn has surged above $5 per bushel after the mandates.

c.       The mandates reduce the amount of corn available for human consumption and for feed corn-fed livestock.

d.      The increased pressure to plant more corn for ethanol has reduced the land available for wheat and soybean crops. It has also put pressure to plant corn in areas that aren’t suited to this type of agriculture and is leading to the changing of delicate ecosystems.

e.       The mandates are forcing food costs higher in areas where people are at risk for hunger and malnutrition, which brings into question the human costs associated with this mandate.

f.        The mandates have created an economic environment that impacts major aspects of not only the cost of living but of life itself.

4.      Environmental Damages

a.       Ethanol was promoted in part for its environmental benefits; lower pollution and reduced greenhouse gas emissions relative to gasoline. That is why the growing chorus of environmentalist criticism of the mandate is particularly noteworthy.

b.      There is increased skepticism about the increased inputs of energy; pesticides and fertilizer used to grow more corn.

c.       The stress on the water supplies now that corn production is being expanded in locales where rainfall is insufficient and irrigation is needed.

d.      Soon land that is protected under federal conservation programs will be cleared for more corn production.

e.       Facilities that turn corn into ethanol have environmental emission issues of their own.

f.        Ethanol production also has a negative impact on the top environmental issue of the day; Global Warming. The greenhouse gasses that were to be reduced are actually increasing. 17 to 420 times more carbon dioxide is being created than by using just gasoline.

The following links will provide more details on the facts shown above.

Time for Second Thoughts on Ethanol Mandate, 4-2-2008.pdf

Biofuels and Their Impact on Food Prices from Purdue University Extension.pdf