Should the U.S. stop using corn for fuel?

English: A combine harvesting corn. (Photo credit: Wikipedia)

The drought hammering the Midwest is driving up corn prices, which in the past six weeks have shot up nearly 50 percent to $8.20 a bushel. But drought is not the only thing driving up corn prices.

Most corn is used as livestock feed, not food for humans, and increasing meat consumption worldwide bids up the price of feed. But there’s another big factor as well: Congress has distorted the grain market by favoring the use of corn to manufacture ethanol.
The result has been higher prices for everything from milk to cheeseburgers.

This year, says Robert Bryce of the Manhattan Institute, about 4.3 billion bushels of corn will be converted into motor fuel. That’s nearly 37 percent of this year’s corn crop.

In 2005, just 13 percent of America’s corn production went into ethanol. Back then, not coincidentally, corn was just $2 per bushel.

Congress has pretended that America needed to convert corn into ethanol to reduce reliance on foreign oil. In fact, the policy was to prop up corn prices. All those Midwestern farmers – and their representatives in the House and Senate – rail against “Big Government,” except when it’s doing favors for them.

Nearly as much corn now goes into ethanol production as is used for livestock feed. Without that use, the price of corn would come down. America’s domestic energy production is rising, thanks to new techniques, so ethanol does not significantly enhance energy independence.

Federal subsidies for ethanol finally ended last year. But the government keeps pushing the fuel. The EPA just approved adding more ethanol to gasoline, even though many engines are not designed to run on the new mix and could be damaged by it.

It makes sense to turn non-food “biomass” into ethanol. But why turn a food product into fuel if it creates higher prices on grocery store shelves and in the meat and dairy cases?

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