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Ethanol Eco nomics…

Tom McClintock’s Citizens for the California Republic, 06-18-2007

The public policy farce that the “Green Governor” unleashed with AB 32 (the so-called “greenhouse gas” law) continues. Using their newly granted power to slash carbon dioxide emissions, the California Air Resources Board (all Schwarzenegger appointees) has mandated that every gallon of gasoline sold in California must contain at least 10 percent ethanol by 2010.

First, a few basic facts. Californians use about 15 billion gallons of gasoline a year, meaning that the new ten percent CARB edict will require about 1.5 billion gallons of ethanol. Corn is the most common ethanol-producing crop in the country, yielding about 350 gallons of ethanol fuel per acre. That means converting about 4.3 million acres of farmland to ethanol production, just to meet the California requirement. But according to the USDA, California currently has only 11 million acres devoted to growing crops of all kinds. Get the picture?

The entire purpose of this exercise is to reduce the carbon dioxide emissions from California automobiles (although Californians already have the 8th lowest per capita gasoline consumption in the country). And that’s where the public policy discussion becomes farce.

As more acres are brought into agricultural production, the demand for nitrogen fertilizer will grow accordingly, which is itself produced through the use of fossil fuels. And the most likely source of new agricultural land will be converting rain forests to agriculture, although deforestation is already the second biggest man-made contributor of carbon dioxide emissions, ranking just behind internal combustion. And here’s the clincher: ethanol is produced through fermentation, by which glucose is broken down into equal parts of ethanol and – you guessed it – carbon dioxide.

Obviously, this edict will hit gasoline consumers hard: ethanol is less efficient than gasoline and it’s more expensive – meaning you’ll have to buy more gallons at the pump and pay more per gallon.

The bigger impact, though, will be at the grocery store. By radically and artificially increasing the demand for ethanol, the cost pressure on all agricultural products (including meat and dairy products that rely on grain feed) will be devastating. Earlier this year, spiraling corn prices forced up by artificially increased demand for ethanol produced riots throughout Mexico.

The CARB regulations will undoubtedly hit Californians hard – but they will hit starving third world populations even harder. Basic foodstuffs are a small portion of the family incomes in affluent nations, but they consume more than half of family earnings in third world countries.

So when the global warming alarmists predict worldwide starvation, they’re right. They’re creating it.

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