“Guns don’t kill people, ethanol kills people.” That is my slogan for a broad campaign to change the way the government of the United States approaches energy demands in the 21st century. It is an intentionally bold statement to raise awareness of how the US energy policy has had impact around the globe. Rapid economic growth in Brazil, Russia, India, and China (the BRIC countries) has combined with only slowly energy increasing supply, environmental concerns, and instability in the Middle East to make energy important to the security of the world. My purpose is to lay out a plan which will address the energy crisis as well as the emerging food crisis which has its roots in energy policy.
The most difficult part of the path forward is that no single solution or combination thereof will solve the problem immediately. It may take 20 years to fully address the energy and food problems the world faces right now. Without doubt, measures can be taken to help, but they are more likely to address the symptoms than the disease. Maintaining a political movement over a generation will prove extremely difficult. In the mean time, political parties will change power several times, a new cause célèbre will emerge annually – demanding “emergency” action, and new and real dangers will emerge to threaten the free world.
The Problem
Two obvious solutions to the high cost of energy exist: to increase the supply or decrease demand. The first is difficult but possible, and the second is unlikely without changing much of the way the modern world operates. There is more than one way to increase the energy supply, but current efforts, subsidized by the Federal Government, have had disastrous effects internationally. Corn based ethanol – and $8 billion in federal subsidies – has directly increased the demand for corn while decreasing the supply of other food crops as farmers rush to plant corn over their usual crops. The World Bank reports: “Almost all of the increase in global maize production from 2004 to 2007 (the period when grain prices rose sharply) went for bio-fuels production in the U.S., while existing stocks were depleted by an increase in global consumption for other uses” (The World Bank, 2008).
Table 1. Index of projected real food crop prices, 2004=100
Real Prices. 2007 . 2008 . 2009 . 2010 . 2015
Maize ........ 141 ... 179 ... 186 ... 176 ... 155
Wheat ........ 157 ... 219 ... 211 ... 204 ... 157
Rice ........... 132 ... 201 ... 207 ... 213 ... 192
Soybeans ..... 121 ... 156 ... 150 ... 144 ... 127
Soybean oil .. 138 ... 170 ... 162 ... 153 ... 119
Sugar .......... 135 ... 169 ... 180 ... 190 ... 185
Source: DECPG. (The World Bank, 2008)
Table 1 shows the massive price increases that have hit the worldwide food market since 2004. These price increases have lead to rioting and protests in Haiti (Murdock, 2008), Egypt, and Pakistan, among other places (Hassett, 2008). For example, the price of wheat has increased over 100% since 2004. This has been compounded by a poor wheat harvest in Australia. Fear of shortages has led to one third of wheat exports being sealed behind the borders of the largest exporting countries (Blas, Gorst, & Whipp, 2008).
Admittedly, not all evidence points to corn ethanol as the source of increased commodity food prices. A study recently released by the Agriculture and Food Policy Center at Texas A&M University shows that most of the inflation of food prices has been caused by the increase in the price of oil (Anderson & Outlaw, 2008). This is why a comprehensive energy policy to address all facets of the problem is necessary.
The Solution
To attack energy and food price problems will take a multi-front assault. In the short term, the United States must increase the availability of oil. There are several sources that remain untapped. The Alaska National Wildlife Refuge (ANWR) has the potential to match Prudhoe Bay as the largest domestic oil find. Offshore drilling has become more technically feasible, but Florida and California (among others) have blocked new platforms. These local solutions can yield results over the next 5 to 10 years, but other steps must be taken to look more long term.
The United States has some of the largest coal reserves in the world. As much as 50% of US electricity supply comes from coal. The coal industry claims to have enough reserves to supply the US with energy for 200 years (America's Power). To make coal power more acceptable to environmentalists, technology needs to be further developed to eliminate the pollution from coal powered generation plants. This technology could greatly benefit the world because China has become a large user of coal, completing a new power plant every week to ten days. Any advances in US clean burning coal technology should be given to China to improve their pollution problems while still allowing them to expand their energy supply for a rapidly growing economy.
For electricity generation, the US should build more nuclear power plants. French electricity is 75% nuclear, while the US is only 20% nuclear. Problems exist here, though, because, as MIT news reports there has been a 20 year underinvestment in the nuclear fuel supply (MIT News Office, 2008). Renewable energy such as wind and hydroelectric power generation are attractive where possible, but not every region has the natural resources necessary for these power sources.
Every summer, the news reports that seasonal and regional gasoline blends cause prices to increase. To provide over 20 different boutique fuels each summer is hard on the supply chain. Instead of 20 mixtures, the federal and state regulatory agencies should come together and consolidate into 5 summer fuels. If refineries could phase these fuels in over a month it would lessen some pressure on the supply chain. As reported on Slate.com, these summer blends are necessary to limit evaporation in hot weather, but cause trouble in the winter because of the difficulty of starting engines (Schechner, 2004).
The refining of oil into gasoline has become a problem as well. It is widely reported that a new oil refinery has not been built in 30 years. The only growth in refining capacity has come from expanding existing refineries. Hurricane Katrina damaged several refineries and the remaining facilities were running at 100% of capacity to make up for the damaged refineries in the Gulf Coast. The EPA should approve the construction of new, technically advanced refineries to assist in protecting against natural disasters crippling the refining capacity of the country.
Ethanol mandates should be ended immediately. As discussed above, they have played a role in disrupting the world supply of food. Ending ethanol subsidies and mandates could cut corn prices by 20 % (Borenstein, 2008). The energy required to distill corn into fuel offsets the energy created by ethanol. The World Bank reports: “The grain required to fill the tank of a Sports utility vehicle with ethanol (240 kg of maize for 100 liter ethanol) could feed one person for a year, so competition between food and fuel is real” (The World Bank, 2007). If technology improves such that biofuel production no longer consumes large amounts of energy, it could become more feasible, but no one should starve for the sake of fuel production.
This is a broad solution and will have broad opposition. To implement any or all of these proposals will require addressing the concerns of a wide assortment of interest groups.
Opposition
Environmentalists will be the first group to oppose most of these measures because of the fear of global warming. The only way to resolve their concerns will be to show that the above proposals are actually better for the environment than the current policies. Unbiased research will be vital to obtain persuasive results.
One argument for biofuels is that they will reduce the usage of fossil fuels and lower greenhouse gasses and the threat of global warming. The problem is that rainforests are being cleared to supply acreage for fuel crops. Researchers from Princeton and Iowa State found that instead of lowering CO2 emissions, the actual result is a carbon debt that will take 167 years to repay. Tim Searchinger, the Princeton researcher said, “We can't get to a result, no matter how heroically we make assumptions on behalf of corn ethanol, where it will actually generate greenhouse-gas benefits” (Eilperin, 2008). Farm lobbyists will also provide serious opposition to ending corn ethanol subsidies because they benefit from higher commodity food prices.
Other solutions – like nuclear energy, cleaner coal plants, and wind generation – face the opposition of localized groups. It is the NIMBY phenomenon – people like the idea of cleaner energy sources, but “not in my back yard.” High energy and food prices may be the only thing able to persuade these people to accept local power plants and wind farms.
Supporters
In a way, environmentalists, energy consumers, and people more concerned with national security issues want the same thing. Environmentalists want fewer fossil fuels, energy consumers want cheap fuel, and national security hawks want to avoid sending money to the Middle East. These desires can be aligned with clean, cheap, local energy supplies that could be developed through nuclear power, clean coal, and renewable energy sources. A technological gap exists between where the United States is and wants to be. It will require a Manhattan Project-type investment to obtain the best mix of new energy sources.
Protecting the worldwide food supply will take a similar focus because of the current tendency of large exporters to seal their borders in the face of shortages in foreign countries.
Improved fuel and energy efficiency will not come quickly. The requisite investments in technology will require time to develop. New industries will need to emerge to clean current coal burning facilities. Nuclear power supplies will need to be increased.
Legislature
Leading the opposition to many of these initiatives will be allies of interest groups within both houses of Congress. It almost seems that both ends of the political spectrum benefit from the high price of energy. Democrats and liberals apparently want to increase prices of fuel so people will drive less and buy more fuel efficient vehicles. John Dingell (D-Mich.) has gone so far as to propose a 50 cent per gallon increase in the gasoline tax (The Hill, 2007). The problem is that people with larger families are harmed because they can’t easily switch to smaller vehicles.
Republicans and conservatives, on the other hand, probably want to use higher prices to push for more drilling, more power generation facilities, and new technological development. Admittedly, this paper falls more on the conservative side of these issues. However, the best way to accomplish these proposals is to address the concerns of the Democrats. Energy independence must be paired with energy efficiency. This will increase the local supply while decreasing the demand. Cheaper fuel must be paired with less pollution. Only with both will the quality of life remain the same for current and future generations.
In the House of Representatives, difficulty will emerge because of Democrat majorities. It is expected that the 2008 elections will tilt the balance of power further to the left. If energy prices and food prices continue to rise, the public outcry may force action that would normally be opposed by the Democrats.
The Senate may be more conservative than the House because of slimmer margins between the left and right. However, this makes progress even more difficult because of the inability of most issues to pass a 60 vote threshold to obtain a floor vote. Even issues that have broad public support face difficulty in the Senate.
The important thing is to frame the debate so stopping corn ethanol is a humanitarian effort, increasing nuclear energy is a national security effort, and clean coal is a way to help rapidly expanding international coal plants to improve their emissions. In reality, there is nothing the United States can do to address CO2 emissions without helping the BRIC countries have cleaner, more efficient power supplies.
The only way to get Congress behind these efforts is to get the American people behind this group of proposals. If elections can be framed around energy and food supply issues, elected officials will listen. Big issues change the political landscape. If the ethanol debate and decisions get out of back rooms and into the public discourse, things may change. Ethanol needs to become a national scandal. Al Gore made global warming his signature issue by dramatizing what he claimed to be the real world effects of climate change. To combat his efforts, the human suffering behind ethanol must be made as widely known as global warming issues. It is a real issue as worldwide food prices increase and fields are diverted to heavily subsidized corn ethanol production.
Regulatory Approval
The regulatory issues to address will be building new nuclear power plants, new oil refineries, and changing the standards on summer gasoline blends. Even if support can be found within Congress for the proposals to address energy supply and demand, there will be a concerted effort to stop them through regulatory agencies that have responsibility for the environment.
Any proposed refinery or nuclear power plant will face legal challenges (Davenport, 2008). The last refinery built within the United States was completed in 1976. Gasoline imports increased by almost 100% from 1995 to 2005 because of a lack in refinery capacity (Hargreaves, 2007). Nuclear plants face the same issues.
Changing the summer blends will also require the coordinating of federal, state, and local regulatory agencies. Having more than 20 summer blends is taxing on refinery operations each June. Even if the boutique fuels were reduced to 5 custom blends, and higher standards were adopted, the refining process would be more reliable and the summer price hike would be alleviated.
The only way to force regulatory progress in these three areas will be to get congressional and presidential pressure on them.
Presidential Backing
For numerous reasons, the implementation of most of these policies will not be possible in the remaining time of George W. Bush’s presidency. Therefore, the changes proposed in this paper are partly dependent on the next presidential election. With John McCain as president, it will be easier because many of these proposals are aligned with conservative, free market principles. He also has enough of a reputation of bucking Republican orthodoxy to implement the needed checks and balances to address environmental concerns.
The election of either Hillary Clinton or Barack Obama poses a different problem. They are much more in tune with the environmentalist viewpoint and will stand in the way of expanded oil drilling or refining. The best way to reach them and their supporters is to show that the US cannot impact the environment as less regulated countries expand coal and other technologies. The humanitarian effort to decrease ethanol production will change some liberal’s opinions, and the promise of energy efficiency should persuade more of them.
Conclusion
It has been said that “great causes are not won in a single generation” (Smith, 1939). It may be easier to address one issue at a time, but that will result in slow progress for problems that have immediate threats to the standard of living of people across the world. People everywhere need access to energy. That energy needs to be clean to keep a clean environment for future generations.
Works Cited
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Anderson, D. P., & Outlaw, J. L. (2008, april 10). The Effects of Ethanol on Texas Food and Feed. Retrieved april 30, 2008, from Agricultural Food and Policy Center: http://www.afpc.tamu.edu/pubs/2/515/RR-08-01.pdf
Blas, J., Gorst, I., & Whipp, L. (2008, april 15). Biggest Grain Exporters Halt Foreign Sales. Retrieved april 30, 2008, from Financial Times: http://www.ft.com/cms/s/0/38cd4d58-0b15-11dd-8ccf-0000779fd2ac.html?nclick_check=1
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