Up, Up, and Away

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

Conventional wisdom holds that the Democratic majority in Washington would be bad for business, but some companies were big winners on Tuesday. Just ask any shareholder in Archer Daniels Midland, the agro-conglomerate whose stock jumped 6.5%, to $35.73, the day after the election on no news other than Rep. Nancy Pelosi’s coming accession as speaker. Why, you ask? In a word, ethanol.

The incoming Democratic leadership has made increasing the use of ethanol in the country’s fuel supply a party priority. In the midst of celebrating his victory on Tuesday, Rep. Rahm Emanuel, architect of the Democratic sweep, promised to “get serious about breaking our dangerous dependence on foreign oil,” which in Democratic parlance is code for revving up use of biofuels like ethanol. Rep. John Dingell of the Big Three, who will now be chairman of the Energy and Commerce Committee, supports offering incentives to automakers to redesign cars to burn ethanol-enhanced fuels.

It’s just as bad in the upper chamber. Senator Schumer, head of the effort to win back that Senate, has introduced something called the Ethanol Stimulus Act of 2006. Senator Bingaman, who will take the helm of the Energy and Natural Resources Committee, has introduced legislation in the past to encourage ethanol production and use. Solons of both parties have always enthusiastically imposed tariffs to curb lower-cost imports.

Ethanol is a species of alcohol generally obtained from corn or sugarcane. It can be burned as a fuel in its own right, but it’s most frequently used, in America at least, as an anti-knocking additive in traditional gasoline. When mixed in to gasoline it replaces the artificial additive MTBE, which is falling out of favor over concerns that it’s a carcinogen. In theory, adding ethanol makes guzzling gas a little greener because the byproducts aren’t as damaging to the environment and it’s an eco-friendly plant product.

But the reality is different, a point made in a recent issue of Harvard Magazine by a professor of environmental studies, Michael McElroy. Mr. McElroy’s green credentials are impressive — Vice President Gore even thanked him in “Earth In the Balance” — but the professor is skeptical about the push for greater reliance on ethanol. After considering the fact that ethanol is a less efficient fuel than gas, that ethanol supply can’t keep up with demand, that it isn’t noticeably greener than other fuels, and that it won’t save consumers any money, Mr. McElroy concludes that “turning fields of corn or grain into ethanol will not significantly reduce what President Bush describes as our addiction to foreign oil.”

There’s no way to escape high-priced domestic ethanol. Mr. McElroy points up how corn prices will rise 25% in 2007 unless more corn is grown either by substituting corn for other crops on currently cultivated land or seeding previously unused terrain. The former option will increase other food prices, both for displaced crops like soybeans and for the meat from animals that are fed on those crops. The latter choice will still lead to more expensive corn — and thus pricier ethanol — because the newly cultivated land will be harder to farm (that’s why it’s unused at the moment).

A newly ethanol-dependent America could import. But the two largest producers of ethanol besides America — Brazil and China — are increasingly struggling to meet their own demand for the product. Exorbitant ethanol tariffs, preserved as a sop to American farmers, make imports just as expensive as the domestic product anyway. And it’s hard to see how making America dependent on an energy import from China is any more strategically intelligent than being reliant on oil from Saudi Arabia and Venezuela.

One could try to argue that all the trouble would be worthwhile if ethanol were environment-friendly. But that turns out to be a pretty big if, at least in respect of American ethanol production from corn. Ethanol is essentially a wash environmentally — the reduction in carbon dioxide emissions from burning less gas is offset by the increase in emission of another greenhouse gas, nitrous oxide, from the fertilizer required to grow the corn.

All this is something to watch in the 110th Congress. The fact is that the newfound obsession with ethanol has hardly anything to do with the environment or foreign oil and everything to do with politics — namely, farmers, and most especially the farmers who vote in the Iowa presidential caucuses. It’s no accident Congress declined to lift ethanol tariffs at the height of the gas price peak, as we noted in an editorial of May 3, “The Ethanol Windfall.” And there’s a reason possible presidential candidates from both parties, including Governor Pataki, are quick to jump on the ethanol bandwagon.

About the only presidential hopeful to buck the trend is Senator McCain, who, as Mr. McElroy writes, has called Washington’s ethanol fixation “highway robbery perpetrated on the American public by Congress.” If Democrats are serious about reducing America’s dependence on foreign oil, they can encourage domestic exploration offshore and at the Arctic National Wildlife Refuge instead of subsidizing Big Corn. And if Republicans want to test the Democrats on their pledges to make the 110th a Congress of model integrity, they can start by following the money on ethanol.


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