biofuel mandates

What’s In Store for Egypt After Mubarak’s Departure?

by Hans Bader on February 12, 2011 · 1 comment

in Agriculture, Energy, Ethanol, International, Trade

Recently, Egypt’s pro-American dictator, Hosni Mubarak, was forced to resign after 30 years in power, and forced to give way to a military-controlled government.  Victor Davis Hanson has some interesting reflections on the revolution in Egypt at this link.

Earlier, we discussed the role of ethanol subsidies and biofuel mandates in increasing support for the Muslim Brotherhood, an anti-American group opposed to Mubarak, at this link.  By indirectly increasing wheat prices, ethanol subsidies drove up unrest in Cairo’s slums, which are more supportive of the Muslim Brotherhood than they are of Egypt’s historically much smaller pro-western democracy movements.  (Egyptians historically have spent nearly half their income just on food — more than that in the slums of Cairo and Alexandria, Egypt’s largest cities).

The Washington Post‘s editorial board and various columns in the Post, like one by Professor Tim Searchinger, agreed about the folly of ethanol subsidies and their role in contributing to misery and unrest among Egypt’s poorest.

Egyptian Riots Fueled by Ethanol Subsidies and Biofuel Mandates

by Hans Bader on February 4, 2011 · 5 comments

in Agriculture, Energy, Ethanol, International, Trade

As world food prices hit a record high, protests in Egypt demand the removal of the country’s pro-American dictator, Hosni Mubarak. No one can predict with certainty whether his removal after 30 years in power would lead to a constitutional democracy, or a theocratic despotism. The likelihood of an even worse regime replacing Mubarak is real, and has been increased by the widespread diversion of cropland to produce biofuels rather than food. That in turn has led to rising food prices that have fueled unrest among the poor in the teeming slums of Egypt’s capital city of Cairo.

Increased food prices have also led to increasing support for the anti-American Muslim Brotherhood, which has ties to the terrorist group Hamas: it provides relief and welfare services in the slums, increasing its popularity in times of economic distress, and it enjoys greater support among the country’s poor than among Egypt’s smaller and more Western-oriented middle class.

The Telegraph, a leading English newspaper, calls the recent unrest in Egypt and the Middle East “food revolutions.” It points out that “biofuel mandates” have “diverted a third of the US corn crop into ethanol for cars,” reducing food supplies and driving up food prices. “So instead of growing wheat, our farmers are growing corn in order to cash in on ethanol subsidies.”

Egypt is the world’s largest wheat importer, and  imports “more than half of its food supply.” As CNBC notes, “It is food inflation that is” most fueling opposition to the Mubarak regime among the country’s poor. Egyptians have historically spent over 40 percent of their income just on food.

As Slate notes, the “anti-Western” Muslim Brotherhood “remains the only political movement” in Egypt that is “capable of providing nongovernmental charitable services. This gives it a reliable political base in the slums of Cairo and Alexandria.” Rising food prices have cemented that base, and driven previously apathetic slum-dwellers into the streets, shifting the locus of opposition away from the more Westernized middle class.

Obama has been an avid supporter of ethanol subsidies, with close links to the ethanol lobby, unlike Obama’s 2008 opponent, John McCain, who opposed ethanol subsidies. The Obama administration has pushed ethanol mandates, even though they have a history of helping spawn famines and food riots overseas. For example, the costly climate-change legislation backed by the administration contained ethanol subsidies. The administration supports them even though ethanol makes gasoline costlier and dirtier, increases ozone pollution, and increases the death toll from smog and air pollution. Ethanol production also results in deforestation, soil erosion, and water pollution.

Leading environmentalists have lamented the devastating impact of ethanol and biofuel subsidies on the global environment.

Even commentators with close links to the Obama administration have admitted that ethanol subsidies are a terrible idea. Matt Yglesias at the liberal Center for American Progress, which has close ties to the administration, admits that “ethanol subsidies aren’t a good way to clean the environment, but they’re a great way of raising the price of agricultural commodities.” Economists more critical of the Obama administration, such as Larry Kudlow, have been scathingly critical of ethanol subsidies, linking them to the recent unrest in Egypt and “skyrocketing food prices.”

Ethanol mandates also contributed to starvation, food riots, and a growing anti-American uprising in Afghanistan back in 2008.

New Federal Program Kills Jobs, While Costing Taxpayers Half a Billion Dollars

by Hans Bader on January 11, 2010

in Agriculture, Bailout Watch, Deregulate to Stimulate, Economy, Employment, Energy, Environment, Ethanol, Global Warming, International, Natural Resources, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Stimulus to Nowhere

A federal biofuels program enacted in the name of fighting global warming and reducing dependence on foreign oil is instead killing jobs while perhaps doing more harm than good and costing taxpayers half a billion dollars, reports the Washington Post.

“It sounded like a good idea: Provide…government money to convert wood shavings and plant waste into renewable energy.” But it is now killing jobs by “driving up the price of raw timber, undermining an industry that…used sawdust and wood shavings to make affordable cabinetry.”  Meanwhile, “the Biomass Crop Assistance Program…has mushroomed into a half-a-billion dollar subsidy.” It’s a “Biomass Blunder,” says environmental law professor Jonathan Adler.

At least this program isn’t resulting in malnutrition and death, unlike ethanol mandates and subsidies, which cause starvation and unrest in the Third World.  Ron Bailey writes about the “global food crisis” that has resulted in food riots across the world, including countries like Mexico, Pakistan, Indonesia, Yemen, Haiti, and Egypt.  The crisis, he noted, is caused by “stupid energy policies” in the form of ethanol “mandates” and subsidies, which result in the world’s farmers producing less food and more ethanol.

Food rioting spread throughout Haiti in 2008, endangering the government of its “U.S.-backed president”:  “A desperate appeal from the president Wednesday failed to restore order to Haiti’s shattered capital, and bans of looters sacked stores, warehouses, and government offices.”   The government responded with tear gas and bullets, as this video shows. Food riots also occurred in Ivory Coast and El Salvador.

As the Washington Post earlier noted, “the increasing use of land to produce ethanol” “has led demand for food to outstrip supply.”

In the U.S., “The federal government’s love affair with ethanol subsidies drove up food prices, depleted plains-state aquifers, and subsidized the destruction of water fowl habitat.”

For all this cost, ethanol subsidies do not even reduce net greenhouse gas emissions.  Indeed, ethanol subsidies threaten to cause an enormous amount of environmental damage, deforestation, and soil erosion. For this and other reasons, the New York Times advocates getting rid of ethanol subsidies.

Wheat production is down in the world’s breadbaskets, like the United States, as farmland shifts away from wheat to ethanol production.  In Egypt, a major wheat importer, the fall in worldwide wheat production has triggered bread shortages and unrest as poor people find it difficult to get enough to eat.  The unrest is strengthening support for Islamic extremists opposed to Egypt’s relatively pro-American government.

Many Afghans, facing higher food prices, now have little choice but to grow opium to pay for food: the Soviet invasion and occupation destroyed their irrigation works (and roads), making large-scale food production and transport extremely difficult. And when food prices went up in 2006 and 2007 as a result of ethanol mandates and rising demand for food in India and China, thousands of Afghan children starved to death.

Harmful ethanol subsidies and mandates are likely to expand, thanks to Obama and congressional leaders.  In 2008, Obama repeatedly attacked John McCain for opposing ethanol subsidies, which McCain opposed as a form of corporate welfare for powerful corporations like ADM.

Obama backs expanded ethanol subsidies contained in a huge cap-and-trade carbon tax bill that would do little to protect the environment, while costing the economy trillions. The cap-and-trade bill was pushed through the House before its text even became available. The bill was over 1090 pages long and contained special interest giveaways to a legion of big corporations and their lobbyists. At the last minute, 300 more pages were added to the bill that few in Congress had even read, and had to be manually inserted into the existing 1000 pages after the bill was passed, based on guesses about where those pages would fit in. Thus, the bill did not even really exist at the time it was passed.

In 2008, Obama privately admitted to a San Francisco Chronicle reporter that his cap-and-trade carbon tax would cause people’s electric bills to “skyrocket.” The cap-and-trade bill supported by Obama would lead to big tax increases, administration officials privately have conceded, even though they publicly claim otherwise. “Officials at the Treasury Department think cap-and-trade legislation would cost taxpayers hundreds of billion in taxes, according to internal documents circulated within the agency and provided to the Washington Times” by CEI. It could raise household taxes by $1761 per year, equivalent to a 15 percent tax increase. It would also result in “loss of steel, paper, aluminum, chemical, and cement manufacturing jobs.”

The cap-and-trade bill will do little to cut greenhouse gas emissions, since it contains so many special interest giveaways and environmentally-destructive provisions like subsidies for ethanol.  Instead, notes the Examiner, it will result in massive destruction of the Earth’s forests.  Although the bill’s supporters claim it will cut greenhouse gas emissions, it may perversely increase them by driving industry overseas to places where there are fewer air pollution curbs, resulting in dirtier air.

Meanwhile, Obama has thwarted more use of nuclear energy, which reduces greenhouse gas emissions, by blocking use of the Yucca Mountain nuclear-waste disposal site after billions of dollars in taxpayer money had already been spent developing it.

In other news, a $75 billion Obama mortgage bailout program is actually harming the economy, the housing market, and the construction industry, economists and real estate experts say.  Nobel-Prize winning economist Gary Becker says that Obama’s policies in general are harming the economy.  The $800 billion stimulus package has failed to stem rising unemployment, while reducing the size of the economy over the long run.