ethanol subsidies

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.

Ethanol and the Egyptian Riots

by Hans Bader on February 2, 2011 · 2 comments

in Agriculture, Energy, Environment, Ethanol, International

Ethanol subsidies helped cause the Egyptian riots, contributing to the “skyrocketing food prices” that triggered “the massive unrest now occurring in Egypt,” argues economist and syndicated columnist Larry Kudlow, in “Bernanke and Ethanol Sink Egypt.” “In 2001, only 7 percent of U.S. corn went to ethanol. By 2010, the ethanol share was 39 percent. So instead of growing wheat, our farmers are growing corn in order to cash in on ethanol subsidies.” That harmed Egypt, a major wheat importer. Another factor was the Federal Reserve’s inflationary monetary policy, whose effects have already been felt overseas: “In dollar terms, the price of wheat has soared 114 percent over the past year. Corn has surged 88 percent.” (The Fed is even printing money so that the government can buy its own bonds to facilitate record deficit spending.)

Commentators across the political spectrum worry about the effect of ethanol subsidies.  The environmentalist Jeremy Bloom has an article titled “Egypt’s Ethanol Revolution: Bad U.S.  Policy Driving Up Worldwide Food Price.” Rob Port asks, “Are Ethanol Subsidies the Root Cause of Egyptian Protests?”

As I previously noted, the rise in food prices in Egypt seems to have strengthened the anti-American Muslim Brotherhood, rather than the small pro-western reform movements in Egypt, by radicalizing the slums of Cairo, whose residents sometimes rely on relief provided by the Muslim Brotherhood (the only Egyptian political movement that provides non-governmental charitable services), and who have little connection to the Westernized middle class.

Obama’s State of the Union: A Blueprint for Crony Capitalism and Costly Educational Failures

by Hans Bader on January 26, 2011

in Economy, Employment, Energy, Environment, Politics as Usual, Stimulus to Nowhere

In his State of the Union address, President Obama called for even more spending on his cronies — what he euphemistically referred to as “investments” in “clean energy technology.” Such spending benefits companies that donate millions to liberal politicians, like GE,  which recently spent  $65.7 million on lobbying to extract special favors from the government.

As the Washington Post notes, GE received massive taxpayer bailouts on special, preferential terms not available to other companies:

General Electric, the world’s largest industrial company, has quietly become the biggest beneficiary of one of the government’s key rescue programs for banks. At the same time, GE has avoided many of the restrictions facing other financial giants getting help from the government. The company did not initially qualify for the program.  .  .But regulators soon loosened the eligibility requirements, in part because of behind-the-scenes appeals from GE.

GE’s CEO, Jeffrey Immelt, is the “Chairman of the President’s Council on Jobs and Competitiveness.”

The “clean energy” spending Obama wants includes “initiatives aimed at building the renewable-energy sector — which received billions of dollars in stimulus funding.”

This is a bad sign for American workers, because such green jobs programs have wiped out thousands of American jobs in the past.  The $800 billion stimulus package used “green-jobs” subsidies to send American jobs overseas.  79 percent of those subsidies went to foreign firms, such as an Australian firm that imported Japanese wind turbines, effectively outsourcing American jobs.  (The stimulus package also wiped out jobs in America’s export sector.)  Moreover, some “green jobs” funding actually damages the environment, like ethanol subsidies:  ethanol mandates actually harm the environment, yet the Obama administration apparently considers them to be a “green jobs” program.

Echoing earlier reports that he would advocate “new government spending” on education, Obama attacked the idea of scaling back massive increases in education spending. He called cutting education spending “like lightening an overloaded airplane by removing its engine.” Lost in his hyperbole was the fact that America already spends much more per capita on education than most other wealthy industrialized countries, with worse results.  As spending has exploded, college students are spending much less time studying and reading than they used to.

Dumping more money on the educational system is unlikely to spur economic growth, since so many college students learn little in college, are not interested in learning, and only go to college in order to get paper credentials rather than an education. Obama wants all Americans to attend at least one year of college, saying in his address that “higher education must be within reach of every American.”

Those paper credentials are increasingly useless to many who obtain them.  Most people who went to college because of rising college-attendance rates in recent years wound up in unskilled jobs (including 5,057 janitors who have Ph.D’s or other advanced degrees), while tuition skyrockets. (100 colleges charge at least $50,000 a year, compared to five in 2008-09.)  Bush increased federal education spending 58 percent faster than inflation, while Obama seeks to double it.

Colleges are so awash in money that many elite colleges are using it to rapidly expand educational bureaucracies.  For example, Wake Forest University increased spending on administrators by 600 percent.

Unlike other countries, which focus on educating engineers and other economically-productive occupations, America focuses on superficial, ideologically-fashionable liberal-arts majors.  The Obama administration seems more concerned about the gender ratios in college science departments than the small number of Americans who go into science, and is now contemplating caps on the number of male science students under Title IX to promote what it perceives as gender equity.  Such caps would be based on the Obama administration’s faulty interpretation of Title IX.

Obama Policies Fuel Global Food Crisis Through Ethanol Mandates, While Fostering Obesity in America

by Hans Bader on January 22, 2011

in Agriculture, Energy, Environment, Ethanol, International

Food prices are soaring all over the world. The global food chain is reportedly stretched to the limit, fueled by the fact “that more than a third of the corn produced in the U.S is now used to make ethanol.” As a result of such “bio-fuels” subsidies, one of the world’s largest food producers predicts a “global food crisis.”

Unfortunately, the Obama administration has long pushed ethanol subsidies, even though such subsidies have a history of spawning famines and food riots overseas. For example, the costly climate-change legislation backed by the administration contained massive ethanol subsidies.

The administration is now forcing up the ethanol content of gasoline through EPA regulations, heedless of the fact that 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.

Back in 2008, leading environmentalists lamented the devastating impact of ethanol subsidies on the global environment and the world’s poor. They noted that thanks to ethanol, “deadly food riots” had already “broken out in dozens of nations,” such as “Haiti and Egypt.” And they pointed out that “food-to-fuel mandates are leading to increased environmental damage. First, producing ethanol requires huge amounts of energy — most of which comes from coal. Second, the production process creates a number of hazardous byproducts, and some production facilities are reportedly dumping these in local water sources. . .Most troubling, though, is that the higher food prices caused in large part by food-to-fuel mandates create incentives for global deforestation, including in the Amazon basin. . . huge swaths of forest are being cleared for agricultural development. The result is devastating: We lose an ecological treasure and critical habitat for endangered species, as well as the world’s largest ‘carbon sink.’ . . .the net impact of the food-to-fuel push will be an increase in global carbon emissions.”

By increasing world food prices, ethanol subsidies also fostered Islamic extremism in poor countries like Afghanistan that import much of their food.

Ethanol subsidies are not the only way that the Obama administration is harming poor people. The administration is also discouraging poor Americans from purchasing cheap, nutritious food. For example, it has also disparaged the consumption of potatoes, banning white potatoes from the federal WIC program, while allowing WIC money to be spent on far less nutritious things that are starchy, fatty or sugary (such as apple sauce, which has no nutrition unless vitamin C is artificially added to it).

The potato is superior to most foods in nutrients per dollar (and per acre of farmland), so much so that “in 2008, the United Nations declared it to be the ‘Year of the Potato.’” (Thank you again to the ancients of the Andes for this marvelous little food.)

“This was done to bring attention to the fact that the potato is one of the most efficient crops for developing nations to grow, as a way of delivering a high level of nutrition to growing populations, with fewer needed resources than other traditional crops. In the summer of 2010, China approved new government policies that positioned the potato as the key crop to feed its growing population.” Potatoes provided much of the agricultural surplus that made the Industrial Revolution possible.

Potatoes are more nutritious than other starchy foods like rice and bread, and “are a good source of vitamins.” They have a lot of vitamin C (much more than a banana or an apple), and potassium levels slightly higher than potassium-rich bananas). Potatoes also have all 8 essential amino acids, unlike most other staple foods like corn and beans.

The Obama administration is also using federal funds to subsidize the opening of an International House of Pancakes in Washington, D.C., despite its sugary and fattening entrees, and the development of high-calorie foods that benefit politically connected agribusinesses.

Potato Diet Improves Man’s Health; Obama Administration Bans Potatoes from WIC Program

by Hans Bader on December 27, 2010 · 1 comment

in Health and Illness, Nanny State, Personal Liberty

Chris Voigt lost 21 pounds and improved his health by living on a potato-only diet for 60 days.  Potatoes are more nutritious than other starchy foods like rice and bread, and “are a good source of vitamins.”  They have a lot of vitamin C (much more than a banana or an apple), and potassium levels slightly higher than potassium-rich bananas).

But the Obama administration, which does not understand nutrition, has banned white potatoes from the WIC program (for school lunches and poor mothers), based on the false belief that potatoes are unhealthy.  (Yet critics of the Obama administration’s food nannyism get lectures from liberal journalists.)

Potatoes are critically important in providing the poor with cheap, nutritious food.  As Voigt notes,”In 2008, the United Nations declared it to be the ‘Year of the Potato’. This was done to bring attention to the fact that the potato is one of the most efficient crops for developing nations to grow, as a way of delivering a high level of nutrition to growing populations, with fewer needed resources than other traditional crops. In the summer of 2010, China approved new government policies that positioned the potato as the key crop to feed its growing population.”

After they were brought from America to Europe, potatoes “rescued the Western World” from recurrent famines, and made the Industrial Revolution possible.  They did this by radically increasing the amount of food that hungry peasants could grow per acre, and by enabling farmers to provide the agricultural surplus that would feed burgeoning industrial populations.

In addition to trying to take away poor people’s potatoes, the Obama administration has pushed ethanol subsidies that turn food into fuel and contribute to a “global food crisis” by spawning famines overseas.  The Obama administration is also using federal funds to subsidize the opening of an International House of Pancakes in Washington, D.C., and the development of high-calorie foods that benefit politically connected agribusinesses.

CEI Podcast — December 8, 2010: What’s Driving Ethanol Subsidies

by Ryan Young on December 8, 2010

in Agriculture, Energy, Environment, Ethanol, Global Warming

Have a listen here.

CEI Research Associate Brian McGraw talks about the federal government’s multi-billion dollar subsidies for ethanol, which is now dismissed even by environmental groups as an inferior alternative to gasoline. He also explains what lies in ethanol’s near future. Brian was also recently interviewed on RTV’s Thom Hartmann Show, which you can watch here.

Image credit: Rascaille Rabbit’s flickr photostream.

Two GOP Senators Say Get Rid of Ethanol Subsidies; Gore Says His Support for Ethanol Subsidies a Mistake

by Fran Smith on November 23, 2010

in Agriculture, Energy, Environment, Ethanol, Global Warming

In the Washington Post’s “Plum Line” column today Greg Sargent focuses on two GOP senators’ campaign to get rid of the ethanol subsidies that are due to expire at the end of the year. It’s likely that the issue will be a divisive one on the Republican side, because some strong supporters of ethanol subsidies want to extend the 45-cent-a-gallon tax credit for blenders of ethanol and the tariff on ethanol imports.

Influential Republican Senators Jim DeMint and Tom Coburn are arguing that a clear message in the recent elections was that Americans want to reduce government spending, and the ethanol programs should be on the cutting block.

A surprise new opponent of ethanol subsidies from the other Party is former Vice President Al Gore, who was quoted as saying: “It is not a good policy to have these massive subsidies for (U.S.) first generation ethanol.” Gore noted that ethanol as a fuel has a small energy conversion ratio. He also explained his earlier support for ethanol subsidies as a product of his political ambition to become president:

“One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president.”

Many environmental and food aid groups – some of which had originally supported corn-based ethanol production - turned against this technology because of the diversion of corn crops from food to fuel production as well as the environmental damage of its production. CEI early on – in 2006 — called attention to the land and environmental costs of expanded ethanol production because of the subsidies and other incentives, especially the renewable fuels mandate. In 2007, CEI pointed to the unintended consequences of the ethanol program. Check out CEI’s global warming website for news about CEI’s continued efforts to get rid of the ethanol mandate, subsidies, and tariffs.

Global Food Crisis Forecast; Aggravated by Biofuels and Global Warming Legislation

by Hans Bader on October 26, 2010

in Agriculture, Energy, Environment, Ethanol, Global Warming, International, Natural Resources

A global food crisis is “forecast as prices reach record highs.”  “Rising food prices and shortages could cause instability in many countries as the cost of staple foods and vegetables reached their highest levels in two years.”  “Global wheat and maize prices recently jumped nearly 30% in a few weeks while meat prices are at 20-year highs.” “Meanwhile, the price of tomatoes in Egypt, garlic in China and bread in Pakistan are at near-record levels.”

Drought is one factor in the price spikes.  Biofuels and ethanol subsidies and mandates are another major factor.  According to the UN, “large-scale land acquisitions by foreign investors for biofuels is squeezing land suitable for agriculture.”

Ethanol subsidies have resulted in forests being destroyed in the Third World, and caused famines that have killed countless people in the world’s poorest countries.

These subsidies are expanded in the global warming legislation backed by the Obama administration.  Its ethanol subsidies will result in “damage to water supplies, soil health and air quality.”  The Washington Examiner earlier explained how the global warming bill backed by President Obama would cause deforestation by expanding ethanol subsidies, and thus increase greenhouse gas emissions in the long run.   It was larded up with corporate welfare: 85 percent of its carbon allowances were given away to special interests free of charge, thanks to lobbying that turned the bill into an orgy of corporate welfare.

Earlier, Ron Bailey wrote in Reason magazine about the “global food crisis” that has resulted in food riots across the world, in countries like Mexico, Pakistan, Indonesia, Yemen, Haiti, and Egypt.   The crisis, he notes, is caused by “stupid energy policies” in the form of ethanol “mandates” and subsidies, which result in the world’s breadbaskets producing less food and more ethanol.

In 2008, two prominent environmentalists, Lester Pearson and Jonathan Lewis, published a Washington Post editorial, “Ethanol’s Failed Promise,” which explained how ethanol subsidies and mandates are destroying the environment and fueling hunger and violence worldwide.

Turning one-fourth of our corn into fuel is affecting global food prices. U.S. food prices are rising at twice the rate of inflation, hitting the pocketbooks of lower-income Americans and people living on fixed incomes. … Deadly food riots have broken out in dozens of nations in the past few months, most recently in Haiti and Egypt. World Bank President Robert Zoellick warns of a global food emergency.

Moreover, they noted,

food-to-fuel mandates are leading to increased environmental damage. First, producing ethanol requires huge amounts of energy — most of which comes from coal. Second, the production process creates a number of hazardous byproducts, and some production facilities are reportedly dumping these in local water sources.  Third, food-to-fuel mandates are helping drive up the price of agricultural staples, leading to significant changes in land use with major environmental harm. Here in the United States, farmers are pulling land out of the federal conservation program, threatening fragile habitats. … Most troubling, though, is that the higher food prices caused in large part by food-to-fuel mandates create incentives for global deforestation, including in the Amazon basin. As Time Magazine reported this month, huge swaths of forest are being cleared for agricultural development. The result is devastating: We lose an ecological treasure and critical habitat for endangered species, as well as the world’s largest ‘carbon sink.’ And when the forests are cleared and the land plowed for farming, the carbon that had been sequestered in the plants and soil is released. Princeton scholar Tim Searchinger has modeled this impact and reports in Science magazine that the net impact of the food-to-fuel push will be an increase in global carbon emissions — and thus a catalyst for climate change.

In Human Events, Deroy Murdock explained how rising food prices resulting from ethanol forced Haitians to literally eat dirt (dirt cookies made of vegetable oil, salt, and dirt), caused tortilla riots in Mexico, and fueled violent protests in unstable “powder kegs” like Pakistan and Egypt.

In 2008, finance ministers and central bankers called for end to ethanol subsidies and biofuel mandates. South African finance minister Trevor Manuel called such subsidies “criminal.” Earlier, the Indian Finance Minister Chidambaram noted that “in a world where there is hunger and poverty, there is no policy justification for diverting food crops towards bio-fuels. Converting food into fuel is neither good policy for the poor nor for the environment.”

The EPA is now ratcheting up ethanol use, heedless of the fact that 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.

Federal Government Wastes Millions on Vacant, Run-Down Buildings, Including a Pink Monkey House

by Hans Bader on September 2, 2010 · 1 comment

in Economy, Legal, Politics as Usual, Sanctimony, Stimulus to Nowhere, Zeitgeist

The Department of Veterans Affairs is spending millions annually on 314 run-down, vacant buildings, including a pink monkey house. “The buildings are home to rats, lead paint, wall-to-wall fungal growth, mold, radon, and spare tires,” notes the Washington Examiner.

“Billions of stimulus dollars have been wasted on programs” highlighted by Citizens Against Government Waste, such as “$554,763 for new windows in a visitor’s center that closed in 2007 in Washington. In several instances, stimulus spending has actually reduced private sector employment; in Normandy Park, Washington, $3.8 million was spent on a ‘streetscaping’ project that drove customers away from local businesses, causing a local restaurant to fire two employees.”

As noted earlier, money from the stimulus package is being wasted on things such as “Saturday night ‘pervert’ revues.”   “Join your fellow pervs for some explicit, twisted fun,” urged one  recipient of stimulus money.

Earlier, Obama fired an inspector general, Gerald Walpin, who uncovered fraud by an Obama supporter in the federal AmeriCorps program, whose budget Obama has massively increased.  AmeriCorps money has been wasted in the past on ideological causes, like paying young people to lobby for rent control.

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