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July 15, 2006

Cars Or People?

Lester Brown, founder of the Earth Policy Institute, has released a new position paper on the use of grains to manufacture fuel. This is enormously important material. Excerpt:

Cars, not people, will claim most of the increase in world grain consumption this year. The U.S. Department of Agriculture projects that world grain use will grow by 20 million tons in 2006. Of this, 14 million tons will be used to produce fuel for cars in the United States, leaving only 6 million tons to satisfy the world’s growing food needs.

In agricultural terms, the world appetite for automotive fuel is insatiable. The grain required to fill a 25-gallon SUV gas tank with ethanol will feed one person for a year. The grain to fill the tank every two weeks over a year will feed 26 people.

Investors are jumping on the highly profitable biofuel-bandwagon so fast that hardly a day goes by without another ethanol distillery or biodiesel refinery being announced somewhere in the world. The amount of corn used in U.S. ethanol distilleries has tripled in five years, jumping from 18 million tons in 2001 to an estimated 55 million tons from the 2006 crop.

In some U.S. Corn Belt states, ethanol distilleries are taking over the corn supply. In Iowa, a staggering 55 ethanol plants are operating or have been proposed. Iowa State University economist Bob Wisner observes that if all these plants are built, they would use virtually all the corn grown in Iowa. In South Dakota, a top-ten corn-growing state, ethanol distilleries are already claiming over half of the corn harvest.

With so many distilleries being built, livestock and poultry producers fear there may not be enough corn to produce meat, milk, and eggs. And since the United States supplies 70 percent of world corn exports, corn-importing countries are worried about their supply.

Since almost everything we eat can be converted into fuel for automobiles, including wheat, corn, rice, soybeans, and sugarcane, the line between the food and energy economies is disappearing. [...]

As the price of oil climbs, it becomes increasingly profitable to convert farm commodities into automotive fuel, either ethanol or biodiesel. In effect, the price of oil becomes the support price for food commodities. Whenever the food value of a commodity drops below its fuel value, the market will convert it into fuel. [...]

Brazil, the world's largest sugar producer and exporter, is now converting half of its sugar harvest into fuel ethanol. With just 10 percent of the world's sugar harvest going into ethanol, the price of sugar has doubled. Cheap sugar may now be history. [...]

The profitability of crop-based fuel production has created an investment juggernaut. With a U.S. ethanol subsidy of 51¢ per gallon in effect until 2010, and with oil priced at $70 per barrel, distilling fuel alcohol from corn promises huge profits for years to come. [...]

The soaring demand for crop-based fuel is coming when world grain stocks are at the lowest level in 34 years and when there are 76 million more people to feed each year. [...]

Simply put, the stage is being set for a head-on collision between the world's 800 million affluent automobile owners and food consumers. Given the insatiable appetite of cars for fuel, higher grain prices appear inevitable. The only question is when food prices will rise and by how much. Indeed, in recent months, wheat and corn prices have risen by one fifth.

For the 2 billion poorest people in the world, many of whom spend half or more of their income on food, rising grain prices can quickly become life threatening. The broader risk is that rising food prices could spread hunger and generate political instability in low-income countries that import grain, such as Indonesia, Egypt, Nigeria, and Mexico. [...]

There are alternatives to using food-based fuels. For example, the equivalent of the 3 percent gain in automotive fuel supplies from ethanol could be achieved several times over — and at a fraction of the cost — simply by raising auto fuel efficiency standards by 20 percent. Investing in public transport could reduce overall dependence on cars.

There are other fuel options as well. While there are no alternatives to food for people, there is an alternative source of fuel for cars, one that involves shifting to highly efficient gas — electric hybrid plug-ins. This would enable motorists to do short-distance driving, such as the daily commute, with electricity. If wind-rich countries such as the United States, China, and those in Europe invest heavily in wind farms to feed cheap electricity into the grid, cars could run primarily on wind energy, and at the gasoline equivalent of less than $1 a gallon. [Emphasis added]

As the price of oil ratchets higher, the conflict between grain for fuel and grain for food will intensify. The world's affluent will, in a very real sense, be filling their gas tanks with food they've taken from the mouths of the world's poor.

This is an example of how the market and the money economy allow us to abstract things out of our awareness that we'd never agree to if the choices were made visible and concrete. If you pulled up to the gas pump and there was a hungry family sitting there that would go hungry if you filled your tank, few of us would be so selfish as to gas up and go on our happy-motoring way. But out of sight, out of mind.

The rush to convert food to fuel can be seen as a measure of our addiction to a fuel-based way of life. Like addicts who spend everything on heroin, letting themselves and their kids go hungry, all we can see is how we're going to get the next fix. No matter who it hurts.

The choices we make regarding fuel efficiency and alternative fuels will, at bottom, be moral choices. Do cars come first? Or do people?

Posted by Jonathan at July 15, 2006 05:11 PM  del.icio.us digg NewsVine Reddit YahooMyWeb


Well duh. Look at land prices near you. How does one make a 'go' of it as a farmer at $7,000 an acre land?

What can you grow?

Posted by: eric blair at July 16, 2006 09:15 PM

Aside from the stated problems of land and crop use, the 51 cent per gallon subsidy says our government is at least encouraging biofuels and thus in some way addressing our future energy needs. The same is true with solar ( http://www.aepcnepal.org/sp/seafs.php ) and other forms of alternative energy.

With the population explosion and grain reserves frightfully low, crops should not be pitted between food and fuel. This is one subsidy the U.S. can do without. Higher sugar prices however, are something the U.S. waistline desperately needs.

Posted by: Jeff at July 18, 2006 04:55 PM