American Elephants

Don’t Like Rising Food Prices? End the Ethanol Mandate. by The Elephant's Child
March 4, 2013, 6:57 am
Filed under: Capitalism, Economy, Energy, Environment | Tags: , ,

Your government at work— caused a few problems on January 1. First of all was the expiration of the payroll-tax cut . With the turn of the calendar, the take-home pay of the average American family dropped by $80 per month.

Then the IRS delayed the start of its tax refunds to January 31 from January 17. What is it about this administration? They can’t seem to meet their deadlines at all. The Senate has been unable to produce the budget required by law since April 29, 2009. Long time passing. The president’s budget proposal is also way past it’s legal due date. Secretary Sebelius is behind on due dates. If the people at the top do not believe statutory deadlines are important, then apparently nobody else does either. Don’t count on getting away with that with your income tax. Only works for the administration.

But these things have consequences.  Food prices are rising faster than overall inflation. Inflation is a hidden tax, especially when it hits essentials like food. Core inflation is running around 2%, but the Department of Agriculture predicts that food prices will climb at a 3% to 4% rate in 2013.  You’ve probably noticed all the things that are suddenly in thinner packages, or smaller packages. Items that were packaged by the pound (16 oz.) are now 12 oz.. at the same price.  Gas prices are up 30 cents a gallon so far, long before summer driving raises costs.

There is one step that the government could take that would certainly significantly end the rise in food costs. End the ethanol energy mandate. The ethanol mandate essentially pays farmers to grow fuel instead of food, and corn is integral to all the rest of the food production process. A rise in the price of corn results quickly in a rise in the cost of meat, poultry, dairy and soy products. Some 40 percent of the nation’s annual corn crop is directed into ethanol production.

Congress allowed direct ethanol subsidies to end in 2011, but the renewables standard remains, and it is the bigger factor by far. Even if we just partially relaxed the renewables standard, corn prices could drop by as much as 20 percent.

The idea that ethanol is a “cleaner” fuel has proven false, and it’s use does not reduce carbon dioxide emissions — but then it has become clear that carbon dioxide in the atmosphere is not causing global warming, so there is no reason for the mandate in any case. Carbon dioxide emissions have continued to increase,  but there has been no warming of the climate in 16 years. Another of those governmental “bright ideas” that didn’t prove out. Farmers, however like the higher prices brought from selling their corn for fuel, and farm state politicians like to please the farmers.

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