» Hungry like the ethanol wolf (NRO)
The federal government can do something right now to provide relief to Americans facing higher food prices: Repeal the ethanol mandate. The diversion of one-third of the American corn crop into ethanol production is a direct result of the 2005 law that required gasoline makers to buy 7.5 billion gallons of ethanol — a mandate that the 2007 energy bill President Bush signed in December increases to 36 billion gallons by 2022.
We realize that a repeal is highly unlikely, given that the machinery of government is currently calibrated to move in the opposite direction on biofuels, but as food prices keep going up, pro-ethanol politicians will find it increasingly difficult to justify their position. Food riots in developing countries are becoming more frequent. Wal-Mart’s Sam’s Club has started limiting sales of rice because immigrants are buying all the rice they can and sending it to relatives in countries suffering from food shortages. In the U.S., the Labor Department reported this month that the price of bread is up 14.7 percent from last year. Milk prices are up 13.3 percent.
The production of ethanol is not the only factor driving food prices up. Demand for food is growing in China and India as more people in those countries move into the middle class. Fuel prices are up, making it more expensive to cultivate food crops and transport them to market. A drought in Australia, a major wheat exporter, has sent bread prices soaring.
But demand for ethanol has also had an impact on food prices.
Posted by Kevin Whited on 26 April 2008, 09:55 PM
Filed under: General, Business/Economics, American Politics
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Citation: Sphere: Related Content | Technorati | Bloglines | Add This
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