The Ethanol Threat

The biofuel craze seems unstoppable. Ethanol is routinely touted as the superfuel of the future, the renewable alternative to gasoline. Just how good is ethanol and what social costs will we have to bear because of it? Those questions were explored in Asia Times by William Engdahl an observer of oil geopolitics who warns that we're about to experience a world food price shock to rival the recent world oil price shock:

The late American satirist Mark Twain once quipped, "Buy land: They've stopped making it." Today we can say almost the same about corn, or all grains worldwide. The world is in the early months of the greatest sustained rise in prices for all major grains, including maize, wheat and rice, that we have seen in three decades. Those three crops constitute almost 90% of all grains cultivated in the world.

He claims the American government's plan to push ethanol is founded less on environmental concerns and more on the interests of big business.

The heart of the plan is a huge, taxpayer-subsidized expansion of use of bio-ethanol for transport fuel. The president's plan requires production of 35 billion US gallons (about 133 billion liters) of ethanol a year by 2017. Congress has already mandated with the Energy Policy Act of 2005 that corn ethanol for fuel must rise from 4 billion gallons in 2006 to 7.5 billion in 2012. To make certain it will happen, farmers and big agribusiness giants like ADM or David Rockefeller get generous taxpayer subsidies to grow corn for fuel instead of food. Currently ethanol producers get a subsidy in the US of 51 cents per gallon (13.5 cents per liter) of ethanol paid to the blender, usually an oil company that blends it with gasoline for sale.

As a result of the beautiful US government subsidies to produce bio-ethanol fuels and the new legislative mandate, the US refinery industry is investing big-time in building new special ethanol distilleries, similar to oil refineries, except they produce ethanol fuel. The number currently under construction exceeds the total number of oil refineries built in the US over the past 25 years. When they are finished in the next two to three years, the demand for corn and other grain to make ethanol for car fuel will double from present levels.

Engdahl also takes exception to the glowing claims made about ethanol.

The green claims for biofuel as a friendly and better fuel than gasoline are at best dubious, if not outright fraudulent. Depending on who runs the tests, ethanol has little if any effect on exhaust-pipe emissions in current car models. It has significant emission, however, of some toxins, including formaldehyde and acetaldehyde, a suspected neurotoxin that has been banned as carcinogenic in California.

Ethanol is not some benign substance as we are led to think from the industry propaganda. It is highly corrosive to pipelines as well as to seals and fuel systems of existing car or other gasoline engines. It requires special new pumps. All that conversion costs money.

But the killer about ethanol is that it holds at least 30% less energy per liter than normal gasoline, translating into a loss in fuel economy of at least 25% over gasoline for an Ethanol E-85% blend.

No advocate of the ethanol boondoggle addresses the huge social cost that is beginning to hit the dining-room tables across the US, Europe and the rest of the world. Food prices are exploding as corn, soybeans and all cereal-grain prices are going through the roof because of the astronomical - US Congress-driven - demand for corn to burn for biofuel.

This year the Massachusetts Institute of Technology issued a report concluding that using corn-based ethanol instead of gasoline would have no impact on greenhouse-gas emissions, and would even expand fossil-fuel use because of increased demand for fertilizer and irrigation to expand acreage of ethanol crops. And according to MIT, "natural-gas consumption is 66% of total corn-ethanol production energy", meaning huge new strains on natural-gas supply, pushing prices of that product higher.

The idea that the world can "grow" out of oil dependency with biofuels is the PR hype being used to sell what is shaping up to be the most dangerous threat to the planet's food supply since the creation of patented genetically manipulated corn and other crops.

A result of the biofuel revolution in agriculture is that world carryover or reserve stocks of grains have been plunging for six of the past seven years. Carryover reserve stocks of all grains fell at the end of 2006 to 57 days of consumption, the lowest level since 1972. Little wonder that world grain prices rose 100% over the past 12 months. This is just the start.

...we are just getting started on the greatest transformation of global agriculture since the introduction of the agribusiness revolution with fertilizers and mechanized farming after World War II. The difference is that this revolution is at the expense of food production. That pre-programs exploding global grain prices, increased poverty, and malnutrition. And the effect on gasoline import demand will be minimal.

Professor M A Altieri of the University of California at Berkeley estimates that dedicating all US corn and soybean production to biofuels would only meet 12% of gasoline and 6% of diesel needs. He notes that although one-fifth of last year's US corn harvest went to bio-ethanol, it met a mere 3% of energy needs. But the farmland is converting at a record pace. In 2006 more than 50% of Iowa and South Dakota corn went to ethanol refineries.

Farmers across the US Midwest, desperate for more income after years of depressed corn prices, are abandoning traditional crop rotation to grow exclusively soybeans or corn, with dramatic added impact on soil erosion and needs for added chemical pesticides. In the US some 41% of all herbicides used are already applied to corn. Monsanto and other makers of glyphosate herbicides such as Roundup are clearly smiling on the way to the bank.

Big Oil is also driving the biofuels bandwagon. Professor David Pimentel of Cornell University and other scientists claim that net energy output from bio-ethanol fuel is less than the fossil-fuel energy used to produce the ethanol. Measuring all energy inputs to produce ethanol, from production of nitrogen fertilizer to energy needed to clean the considerable waste from biofuel refineries, Pimintel's research showed a net energy loss of 22% for biofuel - they use more energy than they produce. That translates into little threat to oil demand and huge profit for clever oil giants that re-profile themselves as "green energy" producers.

So it's little wonder that ExxonMobil, Chevron and BP are all into biofuels. This past May, BP announced the largest ever research-and-development grant to a university, $500 million to the University of California-Berkeley, to fund BP-dictated R&D into alternative energy, including biofuels. Stanford University's Global Climate and Energy Program got $100 million from ExxonMobil; University of California-Davis got $25 million from Chevron for its Bio-energy Research Group. Princeton University's Carbon Mitigation Initiative takes $15 million from BP.

In the mid-1970s, secretary of state Henry Kissinger, a protege of the Rockefeller family and of its institutions, stated, "Control the oil and you control entire nations; control the food and you control the people." The same cast of characters who brought the world the Iraq war, and who cry about the "problem of world overpopulation", are now backing conversion of global grain production to burn as fuel at a time of declining global grain reserves. That alone should give pause for thought. As the popular saying goes, "Just because you're paranoid doesn't mean they aren't out to get you."

Is Engdahl right about ethanol? At least some of his claims are well founded, especially the impact on food stocks. Months ago Gwynne Dyer noted that the amount of corn required to fill the tank of an SUV with ethanol twice equals the amount needed to sustain an adult for a year.