Posted on 02/02/2007 11:10:32 PM PST by neverdem
Many Democrats and some Republicans applauded President Bush's State-of-the-Union proposal for a 20% reduction in gasoline use over the next 10 years, largely through greater reliance on ethanol.
Bush's idea, however, is adding corn-based fuel to protests in Mexico City. Existing federal laws that mandate ethanol in U.S. gasoline have diverted trainloads of corn from America's food supply-chain to ethanol factories. This boosted U.S. corn prices nearly 80% in 2006.
That's bad enough if you buy corn on the cob for a weekend barbecue. But it's much worse if you are a poor Mexican surviving on corn tortillas. A kilo (2.2 pounds) of tortillas recently has shot up 55 percent, from 5.5 to 8.5 pesos. Poor Mexicans are not taking this sitting down.
In fact, some 75,000 of them stood up Wednesday in Mexico City's giant Zocalo plaza. More than 200 unions and social-action groups organized protests to denounce the rising price of this basic Mexican staple.
"[Felipe] Calderon stole the elections, and now he's stealing the tortillas!" screamed one banner, chiding Mexico's narrowly elected, new president. According to the Associated Press, the normally free-market Calderon has been trying to get manufacturers to follow a gentlemen's agreement to keep tortilla prices flat.
How has American energy policy inspired political instability in Mexico? This is a pristine example of The Law of Unintended Consequences. When big government does big things, all sorts of wacky stuff happens, and rarely for the good.
Uncle Sam gives ethanol manufacturers a 51-cent-per-gallon subsidy. Anyone who wants to import ethanol is welcome to, provided he pays the 54-cent-per-gallon tariff slapped on ethanol imports. This is one reason for another unintended consequence: gasoline prices shot up last summer since ethanol, largely produced in the Midwest, had to be shipped south and to both coasts to be blended, by law, with gasoline. Importing Brazilian ethanol into Atlantic and Pacific ports would have made sense, but then-House Speaker Dennis Hastert hated the idea, since that would put competitive pressure on his corn-farming Illinois constituents.
"I don't see an economic plus in it right now," Hastert sniffed.
What other unintended consequences could the federal government's ethanol-mania propel?
First, poor Mexicans will feel even poorer as tortilla prices stay high or climb even higher. At the margin, watch for more of them to throw up their hands and head north, to a neighborhood near you.
Second, as fuel companies buy more and more corn, prices will rise for corn flakes, corn bread, popcorn, corn syrup, and other food items. Grocery bills should grow, at least marginally.
Third, humans eat corn, but so do cows, pigs, and chickens. Meat prices will rise, hurting U.S. consumers and making American meat exports less competitive on world markets.
Fourth, if they have not already, members of the Federal Reserve Open Market Committee will notice these increases in consumer and producer prices. Fearing inflation, they could start increasing interest rates. That would slow the economy and push into foreclosure more Americans with variable home mortgages.
This economic damage will accelerate if President Bush promotes, or if the federal government mandates, a one-fifth drop in gasoline use by 2017. According to estimates by Cato Institute scholars Jerry Taylor and Peter Van Doren, writing in the Winter 2007 issue of The Milken Institute Review, "If all the corn produced in America in 2005 were dedicated to ethanol production…it would have reduced U.S. demand for gasoline by, at most, 12 percent." So, to reach Bush's 20 percent goal, corn production must grow to 167 percent of its 2005 levels, and every kernel must go into ethanol. Kiss your corn pudding goodbye.
Cultivating that much corn will require even more farmland. Securing it likely will require chopping down the same trees that inhale the carbon dioxide that humans and cars exhale. If Al Gore is telling the truth, this will increase global warming. So, one of the environmentalists' favorite tools for fighting global warming actually could exacerbate it. Meanwhile, as the Wall Street Journal editorialized on January 27, "ethanol increases the level of nitrous oxides in the atmosphere and thus causes smog."
How lucky we are to have a government big enough to tie its own shoelaces together.
Mr. Murdock, a New York-based commentator to HUMAN EVENTS, is a columnist with the Scripps Howard News Service and a media fellow with the Hoover Institution on War, Revolution and Peace at Stanford University.
There goes the pie in the sky dream of low priced fuel.
It's Shocking !!! Shameful Waste !!! Awful Thing To Do !!
Shame On George Bush !!! All That CORN !!! Po'Mexicans !!!
Make Whiskey With All That Corn !!!...;0)
Kinda like my reply on this thread: http://www.freerepublic.com/focus/f-news/1773981/posts
... when someone asked "Now what exactly are we supposed to be saving by using corn ethanol?" ...
I replied:
"By using corn ethanol for fuel, we increase the price of food products, thereby increasing the price. It will eventually bankrupt us to continue to feed the world. While this ethanol thing gets legs, the environmentalists will attempt to shutter the oil business once and for all through a variety of legislation to make it too restrictive and taxed too heavily. Once we are bankrupt and the oil business has been successfully shut down by the leftist environmentalists, it's back to the stone age for us, which has been the leftist's plan all along. See?"
The law of unintended consequences applies here, but you've really got to wonder if it is really unintended.
But it's much better if you're a Mexican peasant farmer trying to make living while the U.S. dumps subsidized corn on international markets. "Feeding the world's poor" is a nice warm fuzzy slogan that often masks the sabotage of Third World agriculture.
Not that this is a problem for liberal elites -- Third World farmers who can't make a living back home can always sneak into the U.S. to do jobs Americans don't want to do.
The total subsidy works out to quite abit more when you figure in the subsidies for the corn itself, for transportation, and the tax abatements at the pump. Lots more.
The law of supply and demand interupts shangri-la. The farm lobby has been
pushing ethanol for over a decade but they can't deliver the
needed supply. Never could.
It's all about basic economics 101. The yield of ethanol per acre of corn is small. The scope of the ethanol craze would require most of the U.S. to be under tillage for corn.
Let's go to some other moronic bio-fuel solution like using
used toilet paper or shoe string.
I resent having to pay more for whiskey.
This could be a boon for those bootleggers.
Hey, Otis! where'd ya get the hooch?
Yep, we always ought to trust the government over the market to give us just what we deserve.
We might as well hop in our SUV's and go have a last fling in Vegas to enjoy ourselves. I plan to drink and eat so much that I'll personally emit even more hydrocarbons.
whoever wrote this, is mentally ill.
a kilo of corn sells for less than two pesos
The article says 51 cents a Gallon. There are 42 gallons in a barrel of petroleum products.
This is a subsidy of $21 a barrel for ethanol producers. Pretty large largess...
Thanks. Never underestimate the amount of a politicians' subsidy.
ping
Are you any relation to the cereal making Kelloggs?
http://www.elpais.com/articulo/internacional/mexicanos/pobres/quedan/tortillas/elpepuint/20070117elpepiint_15/Tes
Los mexicanos más pobres se quedan sin tortillas: El aumento de precio del maíz importado de EE UU, que se ha disparado un 150%, amenaza con provocar un estallido social
Los mexicanos más pobres no dan crédito a lo que ven. Apenas un mes y medio después de la toma de posesión de Felipe Calderón, el presidente que prometió en su primer discurso emplearse a fondo en la lucha contra la pobreza, se ha disparado el precio de las tortillas de maíz, elemento básico de la dieta popular. Las protestas se han hecho sentir en diversos puntos del país, el tema acapara la atención de los medios informativos y está en boca de todos. El kilo de tortillas, cuyo precio habitual no supera los 7 pesos (0,50 euros), ha llegado a 18 pesos en el Estado de Baja California.
Los dueños de las tortillerías (hay unas 70.000 en todo el país) y de los molinos de nixtamal, donde se muele el maíz para convertirlo en masa con la cual se elaboran las tortillas, juran que no tienen la culpa del aumento de precios. Son los intermediarios, acusan. El año pasado les vendían la tonelada de maíz a 1.400 pesos, y hace unas semanas a 2.200. Hoy no baja de 3.500 pesos la tonelada, es decir, un aumento del 150%.
Never happy, are they? He leaves the border wide open and all they do is gripe. A-maize-ing. And still "Bush's Fault"
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