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COL Biofuels not the cure-all we seek

By Edward Lotterman

When discussing economic policies it is important not to let rhetoric overpower reality. That happened in a recent, much-reprinted New York Times article that argued "endless fields of corn in the Midwest can be distilled into endless gallons of ethanol ... that could end any worldwide oil shortage ... and free the United States from dependence on foreign energy."

The story went on to discuss how much energy goes into producing ethanol. But it failed to substantiate its lead assertion of "endless gallons of ethanol" that might "free the United States" from oil imports.

The United States is an agricultural powerhouse, but even common crops like corn are not endless. In 2004, we harvested just under 12 billion bushels of corn, the most in several years. One bushel of corn yields about 2.7 gallons of ethanol. So if we processed all the corn we produce, we would have 32 billion gallons of fuel alcohol.

That sounds like a lot, but we also have a large country with many vehicles. We burn approximately 14 million barrels per day of petroleum-based "motor fuels." That is about 588 million gallons per day, or 215 billion gallons per year. It sounds like a lot in absolute terms, but with a population nearing 300 million, it averages less than 2 gallons per person per day.

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Processing all corn grown in the U.S. into alcohol would cover about 55 days' worth of driving. That is a significant amount, but it is far from a level that "could end any worldwide oil shortage."

Yes, corn acreage could be expanded. Yes, other crops such as barley and wheat can also be used to produce ethanol. Yes, crop yields will continue to increase with improved technology. And yes, nongrain crops such as pasture or range grasses could go into ethanol production.

The point is, however, that even with massive increases in alcohol production and substantial increases in vehicle mileage, it is not likely that biofuels will replace fossil fuels for decades, if ever.

While biofuels are less environmentally harmful than petroleum fuels, they are not benign. Even at current acreages, corn production consumes fuel and fertilizer and entails soil erosion. Extending fuel crop production onto marginal land would exacerbate these problems.

As petroleum becomes scarcer and we seek effective ways to limit pollution, biofuels are likely to play an increasingly important role in our economy. If we implement prudent policies, increases in biofuel use can be economically efficient and make our society better off. Such policies would include incentives to reduce energy use and to develop energy saving technology. They would not mandate arbitrary levels of any specific technology including ethanol or diesel fuel derived from soy or other vegetable oils.

But we should not get carried away with our own rhetoric. Grain-derived fuel alcohol is not a panacea for all energy and environmental problems. Deluding ourselves into thinking that it is the solution will lead us to policies that will harm our society rather than help it.

Edward Lotterman, an economist, writes a regular column for the St. Paul Pioneer Press. His e-mail address is elotterman@pioneerpress.com.

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