Once Drunk on Ethanol, Now an Economic Hangover

I love a very dry, dirty Ketel 1 martini with three olives. After all, I practice what I preach: no food for fuel, and a vodka martini is one of the tenets of my declaration of independence.

Shaken, of course

Bloomberg.com wrote an excellent piece of that state of the ethanol industries. As a government mandate, there was a construction boom of ethanol distilleries. 168 at last count. Unfortunately, instead of winners, the losers are many and hit hard, in some cases.

Many towns in poverty-stricken areas thought they won the lottery when distillery permits were granted only to find out that the current state of ethanol is already over-produced for 2008. The 10 billion gallons of ethanol produced is nearly one billion gallons over the need.

With the rush to ‘renewable’ biofuels, the price of corn has skyrocked and in doing so, raised the price of related oil and sugar products as well. Some countries have experienced widespread food shortages and ensuing riots.

In Brazil, the national effort to attain energy independence, designated the sugar cane crop as the biofuel source of choice. That decision came with a great price. Farmers are clearing rainforest land and converting it to cane farms. I haven’t heard the outrage from the environmentalists about this one yet.

Back here in the US, Bloomberg estimates that ethanol may account for 20% of the rise in the price of food, which is on target to increase by 6% this year – the highest increase since 1980 during the Carter doldrum years.

I won’t even get into the amount of energy that goes into the production of ethanol, which far exceeds gasoline. Add to that, the US government pays huge subsidies to conglomerates like Archer Daniels Midland each year as another corporate welfare program.

The ethanol debate may also make the headlines as the presidential candates face off in the coming weeks. Barack Obama has sided with the Bush administration promoting ethanol while John McCain has taken an anti-ethanol stance during his time in Washington. To Obama’s credit, he views ethanol as a transitional answer to our energy picture.

The promise of ethanol continues to evaporate, especially for the small towns that bet the farm – literally. Unfortunately, this isn’t the first government pseudo-entitlement program that has failed miserably. It just has begun to sink it with the American people that the ethanol promise is empty and another boondoggle.

No matter what happens, I will continue to eat corn on the cob and have a well-chilled K1 martini.

Don’t forget the olives.

Ethanol Is Dream Deferred for Farming Towns Too Late to Biofuel – Bloomberg.com