The US biofuels industry is expensive. Making corn fuel is costly. The industry currently enjoys a ‘45 cent tax credit for every gallon of ethanol produced.’ That’s $3 billion in tax credits in a year.
Import tariffs on sugar-based ethanol from Brazil and the Caribbean, logically higher so as to eliminate competition for the domestically manufactured corn ethanol, add to more privileges for the industry to enjoy. To top that, there is a federal ruling on a 10 percent blending requirement. Thus, the domestic market for corn fuel in the US is automatically ensured of a wide captured market.
To sweeten the pot further, the ‘Obama Administration is pushing a big expansion in ethanol, including a mandate to increase the share of the corn-based fuel required in gasoline to 15 percent from 10 percent.’
But what is expensive to make is expensive to sell. And, almost always, it is the consumers that bear the added cost.
In a report from the Congressional Budget Office, it was revealed that for the period of April 2007 to April 2008, the market rise in ethanol use, as supported by all its industry privileges, has caused approximately 10 percent to 15 percent of the increase in food prices. This is partly because farmlands have been turned to planting the raw materials needed for ethanol production, diverted from food production.
No, it’s not a 10-15 percent increase in food prices. It’s 10-15 percent OF the rise in food prices. That’s a HUGE difference. That report says that ethanol caused a 0.5-0.8 percent rise in food prices. So the price of your Pepsi went up by a half a penny thanks to ethanol.
Did this author even glance at the summary of the report or just copy and paste bad info from other poorly researched coverage? It’s really clear on Page 1 of the report.
Thank you for fixing that error.