The Rise and Fall of Ethanol

One of the more telling anecdotes about ethanol comes from Boone Pickens. It’s always an eye-opener to listen to this master raconteur discuss energy and politics. Last month I heard him tell an audience at Georgetown University about a sit-down he had in Washington in the late 1980s. He recounts it much better himself in his upcoming book, The First Billion is the Hardest (Random House), but the gist was that he was on the Hill meeting with a group of senators. The topic was ethanol. Pickens was explaining his mystification at the appeal of a fuel that requires more energy (and water and tax credits) to produce than it delivers at the pump. At the conclusion of the meeting, Bob Dole pulled him aside.

Pickens is an encyclopedia of facts and figures. At 80, he can still tick off oil reserves in Russia, the water-to-oil ratio in Saudi Arabia’s Ghawar oil field, and a whole list of other key indices. Yet to hear him tell it, Dole had a pretty good grasp of higher math as well, and it went something like this: 21 farm states = 42 senators, and they were all for ethanol. His conclusion? “We’re going to have ethanol.”

That was about 20 years ago, and Bob Dole was right. Yellow ethanol - the fuel made from corn - has come on in a big way. Between 2000 and 2006, the amount of corn used for ethanol surged 400 percent from 600 million bushels to more than 2.4 billion according to the USDA. As you might imagine, the price of Iowa farm land has also skyrocketed to more than $4,000 an acre last year. But those days are numbered.

Rising food costs and a sluggish economy are turning the tide against corn ethanol. Last month it was mainstream media: this TIME cover story titled “The Clean Energy Myth.” Today it was the business press: this Wall Street Journal op-ed titled “The Biofuels Backlash.” With millions of consumers up in arms about the rising costs of fuel and food and all three presidential candidates looking for answers, how long can Bob Dole’s 42 senators hold the line?

More Field Reports From The Land Report:

1. Mexico Opposes Ethanol
   As we've seen over the last few months, skyrocketing commodity prices are pushing land values to record levels. They are also squeezing cattlemen and other producers who rely on corn...
2. The Clean Energy Scam
   Amazing new diets, intriguing self-help books, a daily dose of St. John's Wort - we are a country obsessed with quick fixes. Now, as Time points out in this cover...
3. Corn Profits Sky High
   Corn revenues could easily surpass $40 billion in the United States this year as farmers rush to take advantage of rising interest in ethanol,  according to a recent report issued...
4. Low Food Levels, High Corn Prices Mean Less Land for CRP
   Driving today I tuned into C-SPAN Radio on my XM dial looking for something better than the latest Top 20. I caught the tail end of a conversation,  Congressional testimony...
5. I’m Not a Big Fan of Catfish
   But I've been meaning to reference this article that ran in The New York Times on July 18. It's yet another example of the effects of the federal government's mindless ethanol policy....