America is falling in love with heavily-subsizized ethanol as a gasoline substitute, and it is causing riots in Mexico. The problem is that the favored source for American ethanol is corn and the resulting demand by ethanol plants is helping driving the price of corn up globally. For example, the price of tortillas in Mexico jumped 25 percent one week earlier this month. Under pressure from angry citizens, the Mexican government announced that it would end the “tortilla tax” – the various charges and subsidies on corn—and will boost corn imports to hold prices down.
This will be difficult to realize. The US already produces nearly half of the world’s corn and there are ethanol plants under construction across the Midwest. Some project that nearly half of the 2008 US corn harvest could be diverted to ethanol production, making the US not just the world’s largest corn producer, but also possibly the world’s largest corn importer in the near future.
We are thus left with the ugly image of Mexicans struggling to feed their families while wealthy gringos turn food into fuel to feed their gashogs. Making things worse, corn-based ethanol is environmentally dubious owing to the fact that lots of oil is used in ethanol production, from the petrochemical-based fertilizers used to grow the corn to the energy used to ferment and distill the ethanol. Some experts conclude that making ethanol from corn is a net energy loser, with more energy going into producing a gallon of ethanol than is recovered when ethanol is put to work.
The logical solution is to abandon corn in favor of more ethically and environmentally benign biomass alternatives. But the powerful corn lobby and their corn-fed politicians will do everything they can to ensure that alternatives don’t get a foothold. The notion of turning food to fuel in a world of starving people has an inescapable moral and ethical stink, but it also has the perfume smell of money. There is little doubt which fragrance will have the greatest influence on the outcome. Until the U.S. comes to it senses and ends the ethanol subsidy, perhaps Mexican mothers can make their tortillas from switchgrass, or soybeans or seaweed.