Friday, May 2, 2008

Food Prices Starting To Hit Subsidies

From the LA Times:

The American farmer, long an untouchable political icon, has even become something of a political embarrassment on Capitol Hill, with President Bush earlier this week demanding an end to crop subsidies for "multimillionaire farmers."

Congress just last year required that more ethanol be added to the gasoline supply. The mandate is now blamed for inflating the price of corn and other staples.

"It's hard to believe that in five months our country has gone from a strong commitment to pay any price for energy security to the kind of backlash we've seen against ethanol," said Jon Doggett, a lobbyist for the National Corn Growers Assn.

In Congress, some lawmakers are calling for changes in the nation's commitment to ethanol as the biofuel of choice to replace oil. "This is a classic case of the law of unintended consequences. Congress surely did not intend to raise food prices by incentivizing ethanol, but that's precisely what's happened," said Rep. Jeff Flake (R-Ariz.), who introduced legislation this week that would end federal support for ethanol.

Farm-state lawmakers and agriculture lobbyists are stepping up their efforts to protect ethanol, as well as farm subsidies, which have drawn a veto threat from Bush.

OK -- the "multimillionaire farmer" line is a bit over the top and any statement from an ethanol lobbyist should be completely ignored. However, the basic point is obvious: ethanol

-- is a poor way (at best) to achieve energy independence, and

-- ethanol has royally screwed up the food supply in fundamental ways

My guess is that when someone proposed the idea of ethanol there was testimony from a really nerdy, wonkish economist who predicted that what is now happening would result from the policy. Of course, no one listens to wonkish economists because they have little to no sex appeal. They only rely on such annoying things as historical facts.