Political Review - realoutlook.com

The political mania surrounding biofuels has overshadowed it’s short comings and some of the hidden costs which have already shown up at the dinner table. In addition to the increased commodity prices paid for by consumers, tax payers cover the government subsidies, currently 51 cents per gallon, paid to ethanol producers. Though there is no question drastic measures are required to secure the nations future energy supply there are a great many questions as to weather current policies are in the best interest of consumers and taxpayers or the world community in general.

Regardless of the crop used to produce alternative fuels the cost of grain production is invariably tied to the cost of energy; agriculture is an energy intensive industry. But the use of corn as the basis of the government’s ethanol program affects the prices of a wider variety of products than any of the alternatives. In addition to corn based products corn fed livestock and bi-products including milk and cheese have seen price increases in step with the grain itself.

With sugar cane as the basis for it’s ethanol program, Brazil has achieved independence from imported oil using ethanol to supplement domestic petroleum. With an aggressive effort that began over 30 years ago, 70% of all cars in Brazil have flexi-fuel engines that can switch from conventional to any mix of biofuels. Though these products have become a major export the program is made possible by major government subsidies.

Sugar cane is plentiful and is capable of growing in lower quality soils than required by corn. In spite of Brazil’s ethanol program and similar efforts in cane producing economies, including India, the price of world sugar has recently tumbled. But because of complex agricultural pricing legislation domestic sugar is supported at about twice the 11 cent price of world sugar. In addition, there is a 54 cent per gallon tariff on Brazilian ethanol. The U.S. preference for corn derived ethanol is that is what we can grow most of domestically and that Democrats and Republicans alike get support from agribusiness, namely Archer Daniels Midland the largest ethanol producer and the privately held Cargill. But the entire crop could only replace approximately 17% of petroleum deliveries.

With exploding population growth, emerging world economies and higher costs of extracting fossil fuels, exacerbated by environmental restrictions, their will be a price to pay to maintain the western worlds standard of living. But is the use of our basic food staple as an energy source the best strategy? What does this mean for nations depending on U.S. grain exports?

U.S. petroleum imports for June of this year were approximately 13.6 million barrels per day according to the American Petroleum Institute. This figure represents about 65.4% of total domestic petroleum deliveries. April figures show 17.4% were imported from the Persian Gulf. The political ramifications of sending money to belligerent Middle East countries is often sited among the many reasons for pursuing the current ethanol program. But can we afford to ignore existing petroleum reserves off shore, in the Gulf of Mexico and in the Arctic?

Earlier this month the Senate voted to open more of the Gulf of Mexico to oil explorations. Estimates of oil deposits for the Gulf’s outer continental shelf run as high as 44.9 billion barrels. This is in stark contrast to the Bush Administrations failed efforts to open the Arctic National Wildlife Refuge shortly after taking office. Estimates for Alaska’s coastal regions are as high as 26 billion barrels. Since the the oil spill from a offshore rig blowout near Santa Barbara in 1969 Californians have vehemently opposed offshore drilling. Will a more desperate energy situation relax the current moratorium for offshore drilling in California’s coastal region where estimates for oil deposits run as high as 10.13 billion barrels?

Answers to these questions depends on who is spinning the various solution. The only thing all would agree on is that there is a looming global energy crisis. There are a variety fossil fuels that could sustain current levels of energy consumption for over 100 years; crude oil, oil shale, oil sands, coal and the like. Nuclear provides a much greater percentage of the energy requirements in Europe and Japan than in the United States where it supplies 20% of our domestic electricity; in France this is 80%. Each has it’s detractors with valid objections but not such that would should totally ignore any of these sources.

Biofuels are criticized world wide for the strains ethanol conversions are putting on grain reserves which reached a low of 57 days of consumption at the end of 2006. With assumed annual world population growth of 70 million a sustained drought or other disaster could have catastrophic consequences. According to Food and Agricultural Organization data global food security is lower that any time since 1972 when the U.S. exchanged massive grain reserves to a Soviet Union suffering from massive crop failures in exchange for oil to western countries.

Environmental critics point out that American farmers are forgoing traditional crop rotations to grow corn or soybeans exclusively. This not only has a severe impact on soil erosion but requires additional chemical pesticides and fertilizers. In Brazil, Argentina, Columbia, Ecuador and Paraguay forests and grasslands are being cleared to make way for bio-plantations. Critics also site the fact that converting food stocks to petroleum equivalents has little net energy yield as current processes are inefficient.

Several economists, on the other hand, point out that continued U.S. and European government subsidized grain exports have suppressed agricultural development in third world countries. They contend that the increased domestic uses for ethanol fuels will consume excess supplies allowing the development of farming operations that will have a multitude of benefits in these countries including a wider employment base. But natural mishaps can take a drastic tole on expected grain harvests and the drastic effects of these short comings will only be accentuated by this duel use. Last year the Ukraine, Eastern Europe and Canada experienced near drought conditions while Western Europe suffered from excessive amount of rain. Indonesia, Thailand, Malaysia and Egypt have turned to the U.S. for grain because of production problems with their traditional suppliers of Europe and Australia. All this at a time that our reserves are the lowest in 30 years.

Regardless of the issues the die is cast! All U.S. cars since 1988 have been required to run on fuels containing at least 20% ethanol E20 fuel and with slight modifications, 85% blended with petroleum E85 fuel. In his 2006 State of the Union address, President Bush proclaimed the U.S. should replace 75% of imported oil with biofuel by 2025. The Department of Energy has earmarked $375 million for bioenergy research centers. In addition to corn and soy derivatives, funds are available for what are called “second generation” sources such as wood chips and switch grass which have a higher energy content. However, economical conversion processes for these substances have not emerged.

These emerging technologies hold great promise, particularly biodiesel which uses otherwise spent products such as cooking oils and municipal solids converted to diesel fuel equivalents. But if the goal of energy independence is as critical as is indicated by the political turmoil in the petroleum producing countries we must also reconsider the proven and most expedient energy sources at our disposal. While coal and oil shale are plentiful they have steep environmental consequences as well as high production costs under current technologies. The same cannot be said of the vast off shore oil reserves or additional nuclear plants where the consequences are no greater than we are already dealing with. And these would actually generate revenue to help fund the development of future energy sources taking some of the burden of the tax payer and more importantly, the poor who suffer most from increases in basic necessities. [ro_4]

This entry was posted on Monday, August 13th, 2007 at 2:28 pm and is filed under Energy, Environment. You can follow any responses to this entry through the RSS 2.0 feed.