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RENEWED DEBATE ON RENEWABLE ENERGY Commentary by Harold Hough Feb/March 2007 It was to be expected as soon as the dust settled on election night and we knew we were in for a Democrat dominated House and Senate. Renewable energy will once again be touted as the savior of our economy. Unfortunately, as is expected with the mainstream media, glowing ten second sound bites will take precedence over facts. Renewable energy isn't as inexpensive or environmentally friendly as we are led to believe. Solar cells use a stew of toxic chemicals that would cause an environmentalist to gag if they were used in a mine. And windmills kill more endangered birds than all the hunters in the United States. There is also a desire to hide the true costs of renewable energy sources. For instance, wind energy analysts say that two thirds of the economic benefit of windmills comes from tax benefits, not efficiencies. That's not to say that these renewable energy sources don't have a place in our energy base. Here in Arizona, solar panels are quite practical, especially in remote areas, where running electric power lines would be prohibitively expensive. The renewable fuel source that gets politicians most excited is corn-based ethanol. It is a fuel source that also has a built in base of voters – farmers. You can bet your bottom dollar that as politicians start their pre-presidential election pilgrimages to Iowa, that the benefits of corn based ethanol will figure prominently in their stump speeches. The arithmetic is clear. In 2004, the traditionally Democratic states of Iowa and Minnesota both went Republican. Clearly a Democratic sponsored renewable fuel program could be the margin of victory for their 2008 candidate. Of course, we know that the GOP will try to outbid the Democrats for those farm votes with an even more expensive program. One thing we can be sure we won't hear from the renewable fuel proponents is the fact that it takes more than a gallon of fossil fuel--29% more is the best estimate--to make a gallon of ethanol. In addition, various government regulations requiring the use of ethanol significantly increased gasoline prices last summer and led to spot shortages because ethanol can't be carried through pipelines and requires special blending plants. James Glassman, an economist with J.P. Morgan Chase, noted that expensive ethanol was a big factor in the sticker shock consumers encountered at the pump this summer. When gas prices were over $3.00 he noted, "We'd probably have retail gasoline prices between $2.30 and $2.40 a gallon if not for ethanol," Since one of the arguments for a renewable fuel program will be that it is necessary to protect the American economy, I want to ask, "So, what is the economic benefit of corn based ethanol?" It doesn't look like the consumers will find one – paying more at the pump and footing the bill as taxpayers. And, that doesn't even account for the fact that the additional demand for is driving up food prices. Just ask ranchers. Currently corn prices are $3 a bushel, the highest level in a decade. With ethanol production capacity of 11 billion gallons and generous government subsidies to produce it, some ranchers see $4 or $5 a bushel corn in the near future. These high corn prices won't just affect meat prices. As corn becomes more profitable, farmers will begin planting corn instead of other crops like wheat. Cal Dooly, head of the Food Products Association notes, "We wouldn't have a concern with this if it was strictly the result of market forces, but what is driving a lot of this use of corn for ethanol is a fairly generous subsidy for production of ethanol." While energy independence is desirable, the push for renewable ethanol production is wrong headed and will cost Americans a lot – at the gas pump, on their tax returns, and at the check out line in the grocery store. Maybe politicians should focus upon a plentiful energy source that can do the same thing as ethanol – coal to gas production. Coal producers don't need a subsidy to produce coal and producing more coal for gasification won't be felt by the taxpayer of consumer. In fact, since the coal industry is a producer of tax revenue, instead of a subsidized industry, the federal government will actually benefit. As we prepare ourselves for the upcoming push for renewable energy, be sure to let your congressman know that ethanol subsidies are more likely to hurt Americans than help them. | |||
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