James D Hamilton at Econobrowser notes the bipartisan Senate approval of yet another giveaway to ADM and their other pals.
The urge to be seen as doing something about our energy problems is giving rise to legislation that has the potential for more harm than good. The ethanol amendment approved by the Senate yesterday is a case in point.
Whatever the argument in favor of such a measure, it isn’t to provide a new energy source. David Pimental of Cornell concluded that when you take into account the energy required to plant, grow, harvest, and process the corn, 1.7 Btu of energy inputs get used up to produce 1 Btu equivalent in ethanol; Resource Insights and Energy Outlook have more discussion of this.
Which is not to endorse an energy theory of value, as if energy were the only wasted input that we should be concerned about. When you add up the value of the land, labor, and capital also used to produce that 1 Btu of ethanol, the economic loss is really quite considerable. Even the current use of ethanol for fuel would not remotely survive without huge public subsidies already in place.
There are other studies of other processes that yield a more optimistic energy ratio than 1.7:1, but as Hamilton points out, a small energy surplus (and that’s the best case here) is far from enough to justify this barrel of pork.
What is the justification? No real mystery there; the usual suspects are at this trough.
So what is the point of the amendment? Hard to come up with a good answer other than to throw a new benefit to farmers, not to mention Archer Daniels Midland. It looks to me less like an energy plan and more like the usual pork barrel, in this case, corn-fed pork.
The benefit to farmers, at today’s depressed prices, is nugatory. To ADM, priceless (since we pick up the tab…).