Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Thursday, July 21, 2005

Ethanol Use Increases the Demand for Oil?

That's what David Pimental says. He's the one on whose research I based an earlier posting, Ethanol Nonsense. I received several negative comments about that posting. Well, here's another, based on more recent research (link via The Emirates Economist):

The researchers considered such factors as the energy used in producing the crop (production of pesticides and fertilizer, running farm machinery and irrigating, grinding and transporting the crop) and in fermenting/distilling the ethanol from the water mix.

For ethanol production, the study found that:

  • Corn requires 29 percent more fossil energy than the fuel produced.
  • Switch grass requires 45 percent more fossil energy than the fuel produced.
  • Wood biomass requires 57 percent more fossil energy than the fuel produced.

    For biodiesel production, the study found that:
  • Soybean plants requires 27 percent more fossil energy than the fuel produced.
  • Sunflower plants requires 118 percent more fossil energy than the fuel produced.
  • As the Emirates Economist says,

    So why does it exist at all? Because it is subsidized by the U.S. government. Why? Because political parties are buying votes, in this case from farm states. But in the end what does it do? It is so uneconomic that not it doesn't even displace some of the U.S. demand for fossil fuels, but instead increases that demand. A very stupid policy.

    Slate has a very good summary of their work. My friend, JohnH says this about ethanol:
    1) I'll bet [pro-ethanol studies were] done by engineer-types who haven't included the external costs of producing the ethanol itself. For example, the plant west of Chatham, built with your money and mine, is a toxic nightmare.

    2) Even the political disinformation used to justify the "very stupid policy" is stupid. The claim that an ethanol plant will save farmers by raising ag prices is ridiculous. Surely even a country-wide initiative to build ethanol plants wouldn't raise them. (A nice econometric exercise!)

    3) Why do the media simply ape this junk? Why haven't they caught on to reality and made that the news?

    This is all just another dismal example of failure of public choice. I think I'll go read Dilbert.
    And yet, see this. It reads like more stuff from mediots who get sucked into bad planning and bad economics.
    Who Links Here