Is the ethanol boom about to bust?

Yes

6 of 14

by Cynthia Smith

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Ethanol, the golden fleece of the decade, has been receiving more and more negative publicity. What was once a hope for replacing our dependency on foreign fuels has turned into not only an environmental issue but also an economic one.

A recent study by the National Academies of Science states that ethanol production can have a negative effect on water quality and availability. Not only does an ethanol plant use enough water for 7500 homes but growing the crops to produce ethanol uses vastly more. With drought being top news in much of the country, this is going to fuel even more opposition.

The same study also states that the fertilizer and pesticide run off from crop production for ethanol will most likely have a serious negative impact on the creeks, rivers, watersheds and shorelines. For farmers, ethanol is the golden goose. Government subsidies for corn intended for ethanol production make producing it far more profitable than any other crop. Corn is a resource hog and requires large amounts of nitrogen as well as much higher quantities of water. This contributes to nitrogen and nitrate run off that could decimate already struggling aquatic environments.

Congres s is already waking up to the fact that diverting the nation's corn supply to ethanol is driving up grocery bills. There is one thing that every US constituent has in common; we all eat. The cost of everything from vegetables to chicken is rising as more and more farmers convert farmland from food crop production to industrial corn production.

With Americans already facing rising fuel costs and rising interest rates, soaring grocery prices may be the last straw. The cost of a gallon of milk or a dozen eggs is going to draw a lot more reaction on the voter level than any of the environmental issues. This fact alone is likely to drive Congress to rethink the push to ethanol.

Without subsidies, tax breaks and other government programs to encourage ethanol production, what was once almost guaranteed profit will not be as attractive to investors, farmers and industry. The ethanol industry is a house of cards built on the whims of elected politicians. With a pressure from their constituency, it won't take more than a strong breath to blow the foundations out from under it.

The fact is that ethanol is not the golden fleece and if we don't wise up, the next decade might be spent undoing far more widespread damage than the current fuel crunch.

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