In the current political climate, with major elections approaching and the nation clamoring about the price of gasoline and fears of recession, “ethanol” seems to be the lifeline everyone is grasping. President Bush, in his recent State of the Union address stated that the U.S. government should raise its mandate for ethanol use to seven times the current output of 4.855 billion gallons per year by 2017. Meanwhile, presidential hopefuls are frantically doing a c.y.a. ethanol rain dance involving flip-flopping, downplaying, backtracking, and other desperate moves to ensure the voting public is thoroughly confused. Why all the fuss? On the surface, the shift towards ethanol as a fuel source seems like a viable solution to America’s dependence on foreign oil. It certainly sounds good from the pulpit of the campaign trail. After all, it’s made from corn that grows right here in our own country. What could possibly go wrong?

As with far too many aspects of life, it’s the unintended consequences that surface once the ball is rolling down the proverbial hill that leave us scrambling for solutions. And while it is important, even imperative, that this country reduce its oil dependence and create clean-burning fuel sources, forcing a “solution” instead of letting the free market run its course only creates chaos. And that is exactly what is happening by the government subsidizing corn crops grown expressly for the production of ethanol, and continually mandating its use at the gas pump. And now that the pesky ball is rolling full speed down Mount Everest, here come the unintended consequences… As well as how this whole topic relates to - even belongs in - your favorite food & wine magazine. Read on, dear friend.

In direct relation to ethanol production, the demand for corn has risen sharply in recent years. And since the government subsidizes ethanol production at 51 cents (and up to one dollar for other biofuels) per gallon, farmers can make higher profits by selling their product to biofuel distilleries. That, in turn, has caused the price of corn to increase exponentially (almost 70% in the last 6 months alone). So farmer Joe now has to pay more for the corn that feeds his cattle, poultry, etc. And since half of his costs in raising the animals is feeding them, that price is reflected at the grocery store when you buy meats, dairy, eggs and the like. Of course, you’ll most certainly also pay more for your T-bone steak at your favorite restaurant. And that’s just the tip of the iceberg.

As farmers see the dollar signs in corn production, they are planting it in favor of other food crops. It follows that the price of food crops across the board will increase. Ironically, prices of products made from corn, such as cereal and bread, will most likely be the last to rise, as most of the cost incurred in their production is in the processing, packaging, and distribution.

Agricultural economist Lester R. Brown, president of the Earth Policy Institute in Washington, D.C. states, “The lines between the food economy and the energy economy [are] becoming blurred… Taxpayers may be subsidizing a rise in their own food prices.” He goes on to say, “We’re putting the supermarket in competition with the corner filling station for the output of the farm.” Jean Ziegler of the United Nations calls converting food crops to biofuel a “crime against humanity,” believing that the food shortages and price spikes it is creating causes “millions of poor people to go hungry.”

Higher food costs aside, there’s another small problem with ethanol production. David Pimentel, leading Cornell University agricultural expert, has done some simple math: “Powering the average U.S. automobile for one year on ethanol (blended with gasoline) derived from corn would require 11 acres of farmland, the same space needed to grow a year’s supply of food for 7 people.” Furthermore, Mr. Pimentel points out that 70% more energy is input to produce ethanol than energy output by ethanol. For every one gallon of ethanol made, there is a net energy loss of 54,000 BTUs. Pimentel pulled no punches when he concluded, “Abusing our precious croplands to grow corn for an energy-inefficient process that yields low-grade automobile fuels amounts to unsustainable subsidized food burning.”

But at least ethanol is environmentally friendly, right? It helps reduce greenhouse gas emissions, so we’ve been told. Technically, that is true. Now for the fine print. James B. Meigs, Editor-In-Chief of Popular Mechanics points out, “Corn doesn’t grow like a weed. Modern corn farming involves heavy inputs of nitrogen fertilizer (made with natural gas), applications of herbicides and other chemicals (made mostly from oil), heavy machinery (which runs on diesel) and transportation (diesel again). Converting the corn to fuel requires still more energy.” And ethanol is so inefficient that growers can’t afford to burn ethanol to make ethanol; fossil fuels are much more cost effective, as ethanol decreases fuel economy. And don’t forget to add the environmental costs of soil erosion and ground water depletion that the mass farming of corn incurs… And the destruction of wildlife habitat as more and more land is plowed to grow corn.

Another problem that arises in the ethanol debate is the whole sticky “renewable” energy part. Could corn fuel the nation in its current state? Mr. Meigs thinks not: “If the benefits [of ethanol] are in doubt, the costs are not. It would take 450 pounds of corn to yield enough ethanol to fill the tank of an SUV. Producing enough ethanol to replace America’s imported oil alone would require putting nearly 900 million acres under cultivation – or roughly 95% of the active farmland in the country. Once we’ve turned our farms into filling stations, where will the food come from?”

But if all of this is true, why, oh why is the government putting all of our cash on the ethanol horse? Stephen Moore, director of fiscal policies at the Cato Institute (a non-profit public policy research foundation) is convinced that, “ethanol’s survival has nothing to do with economics or the environment and everything to do with political muscle. Almost 70% of ethanol is produced by America’s premier agri-giant, Archer Daniels Midland (ADM). ADM, the self-proclaimed ‘supermarket to the world’ has spent a small fortune on farming Capitol Hill over the past 20 years. Through programs like ethanol and sugar price supports, it has reaped a profitable harvest from taxpayers. In fact, an estimated 40% of ADM’s profits come from government subsidized products.” It seems ADM doesn’t have a party preference either. Former ADM chairman Dwayne Andreas purportedly donated to both campaigns… to the tune of 4 million dollars.

So while politicians love to demonize “big oil” (some even going so far as to promise their electorate an immediate, Robin Hood style seizing of oil company profits upon election), the ugly truth is that it is being “replaced” with the devil himself. “Big business” has lobbied Washington long enough and hard enough to convince it to require the public to use an inefficient product, in fact, make it illegal not to use that product. Timothy Carney of the American Spectator sums it up nicely: “The government regulates an industry in the name of saving the planet, and ends up aiding big business at the expense of consumers, entrepreneurs, workers, and taxpayers.”

The underlying fatal flaw of ethanol is the fact that it cannot compete in a free market. Without government subsidies, it would have gone the way of the dinosaurs long ago. But politicos keep it alive partly by prodding our collective conscience (we’re saving the planet) and mostly by lying to us loudly, proudly and boldly – all while lining their own political coffers. William Anderson of the Ludwig von Mises Institute (the “research and educational center of classical liberalism, libertarian political theory, and the Austrian School of economics”) explains, “When clean air laws demanded major changes in gasoline reformulation in the spring of 2000, there was chaos in many cities, as disruption in the distribution of gasoline caused prices to spike above $2 a gallon. While consumers and politicians (naturally) blamed oil companies, the real story was much more insidious. Taxpayers (and consumers) paid taxes (and higher prices) to subsidize the corn which, in turn, was made into ethanol (also subsidized). The process of adding tax-funded ethanol in huge quantities disrupted the smooth flow of fuel, which meant price spikes – and most likely did not clear the air one whit. In other words, Congress forced the American taxpayers and consumers to pay large sums of money for a product that in a free market they would not purchase.”

P. Gardner Goldsmith of the Foundation for Economic Education takes it one step further: “With a nonmarket player intervening in the proper flow of capital, prices for everything from cereal, to sodas sweetened with corn syrup, to poultry and pork must increase in cost. Since the passage of the 2005 energy bill requiring an increase of ethanol production to 7.5 billion gallons, the cost of poultry alone has increased 40%.”

So what is the solution? Financial guru and author Ryan Krueger believes that “the true solution – because I don’t want to ignore the problem – is pain. The U.S. isn’t running out of oil, it ran out of cheap oil. Oil will have to cost a lot more for people to change their habits. Additionally, whatever the U.S. ‘saves’ on energy, it’s going to pay for in grocery bills – and at that point, people will no longer talk about taxing big oil for windfall profits made in free markets. Until then, no one will be wondering why their tax dollars are being used for subsidies, which cheat the free markets. Dinner table conversation will change, and the price of dinner will be the force that leads it.”

Instead of bringing about forceful change (which is frighteningly Marxist in theory), perhaps the government should simply butt out and allow the free market to work. A truly free market in and of itself demands change. No one had to force anyone to discard their horse and carriage. Better technology came along, and once it was affordable, old modes of transportation became obsolete. The same would undoubtedly happen regarding energy if only the government would allow it. High oil prices will eventually create a demand for more fuel-efficient vehicles and/or vehicles that utilize a more affordable, abundant energy source. When the technology is there, it will prevail. Forcing that change before the market can sustain it is a recipe for disaster.

Instead of subsidizing ethanol to the tune of $20 billion by 2009, perhaps that money (our tax money) would be better spent researching alternative energy sources such as biofuels derived from “cellulosic biomass” – agricultural residue such as stems, leaves, stalks, or wood chips – that would not adversely effect the nation’s food supply. Or be used to promote competition and experimentation within the free market.

David Pimentel believes that the ethanol boom will inevitably fizzle. He states, “Politicians will see that, first of all, it is not helping our oil independence. It is increasing the price of food for people in the U.S., it is costing an enormous sum of money for everyone, and it is contributing to environmental problems. But I can imagine it is going to take another year or more before politicians realize they have a major disaster on their hands.” By then the elections will be over, the votes tallied, and the candidate chosen. Maybe then we can all put politics aside and find real solutions for the country’s energy issues.