Time to end the ethanol subsidyAugust 14, 2012
Corn based ethanol is a political boondoggle in the best of times. In the current energy and economic climates, it is a policy disaster (please not that this is ethanol we are talking about, not methanol, of which we are strong supporters). The Institute for Energy Research has produced some startling charts which demonstrate the scope of the problem:
IER notes that “Federal policies promoting ethanol are inefficient at any time, but they are particularly harmful to consumers in the midst of a severe drought. The EPA’s schedule of minimum targets for ethanol in the nation’s fuel mix, has caused some 40 percent of the nation’s corn harvest to be used for feeding vehicles, not people. Our analysis here is straightforward economics: Paul Krugman himself publicly called for an end to government ethanol support, over a decade ago, when the pressure on food prices wasn’t nearly as intense and we echo his call today.”
On a personal note: my wife and I raise horses, and the collapse of hay has been devastating to this industry. Quality hay is harder and harder to find and prices are rising. Horses are being malnourished due to deficient hay, while the rising prices and sluggish economy are causing more and more owners to abandon their horses.