Ethanol

Ethanol's Effects on a Local, National, and Global Level

Ethanol. It's a topic that is in constant debate- during elections, on college campuses, in living rooms- it's an issue affecting people here in Springfield and around the world. This paper is going to explain what ethanol is, and it will outline ethanol's effects on a local, national, and global level.

To understand the implications of ethanol, you first have to understand what ethanol is. WE could explain all of that by giving you with a long, drawn out explanation, but that would be boring. Instead, click HERE to see how ethanol is made. If you're too lazy to click on the link, understand that Ethanol is a biofuel (gasoline substitute) that is made from crops, primarily corn.

Locally, Ethanol effects both the farming industry and local politicians have, typically supported ethanol production. There are benefits for increasing ethanol production, but there are detrimental effects as well. Here in Missouri, the corn industry is a multi-billion dollar industry. The production of ethanol fuel in the state of Missouri has many affects on the local level.

Farmers benefiting from the new increase in biofuels, and the towns where ethanol plants are too, like Malta Bend in central Missouri. It has a population of only two hundred and fifty. Malta Bend produces about 280,000 gallons of alcohol a day which is shipped out on rail cars to be blended with gasoline and sold as a cleaner-burning vehicle fuel. The plant brings jobs and high payrolls to areas that can be hard-pressed to generate steady, well-paying jobs with benefits. With the ethanol plant being in Malta Bend, the plant has brought new students into the school district and has spurred the critical need for the construction of new houses. The ethanol plant has brought new growth to the economy of Malta Bend. Since hundreds of eighteen-wheel grain trucks come into the town, the only restaurant stays busy during the lunch hour and more gas it brought in town due to ethanol being about ten percent cheaper than gasoline.

Near Cole Camp, Missouri, the Hilltop Dairy Farm has benefited from the nearby ethanol plant. To cut the raising costs of corn that is used in his ration feed mix for his one hundred Holstein cows, co-owner Mark Chamberlin has been adding wet distiller's grain to the mix. "Feeding wet distillers grain (WDG) saves us twenty-five cents per day per cow," Mark says, "We won't switch our grain ration for a nickel or dime, but a quarter savings is big" (Johnson, Jerilyn). Not only can a livestock producer purchase WDG, but they can purchase dried distiller grains (DDG). Truckloads of DDG are used as feed supplements to cattle and poultry operations. The WDG is used for more high-protein operations like dairy cattle or swine.

Even with some local business, increased ethanol production comes at a price that many American livestock operators do not want to pay. With the increase in ethanol production corn prices have risen an average of $47/person/year. With corn being around four dollars a bushel, the crop farmers are enjoying the high prices, while livestock producers are feeling the pinch of higher feed costs. The losers in this price surge will not only be the small livestock producers, but the big corporate livestock producers such as Tyson and Smithfield.

The cattle industry will be greatly affected by the increase of corn due to many producers using the crop in their grain rations. Economist Bob Utterback stated in early February, "By 2010, if ethanol demand grows to 25 billion to 30 billion gallons, I would not be surprised if livestock production is down 25% to 30% in the U.S. and exports are close to zero" (Utterback). Many cattle farmers have been selling out their young feeder cattle this past winter due not only to the shortage of hay, but the increased price of corn. Many cattle producers will send their feeder cattle to a feedlot to make more money due to the cattle being grained out, but cattle producers are finding out that the costs of keeping cattle at a feedlot are too much to make a profit. For every dime increased in the corn price, there is a five dollar per head drop in the price feedlot operators are willing to pay for feeder cattle Cash receipts for cattle and calves reached a record $50.7 billion in 2006, but should decline to $47.9 billion by 2010 .

The swine industry will see changes for the worst in the years to come and three years of profits for hog producers could end in 2007. The MU-FAPRI expects the price of producing pork to go up 16% in this next year (Dailey). Like the cattle producer sending feeder cattle to the feedlot, the hog producer will be hit with the higher costs of sending their livestock to the feedlot. For every dime increase in the corn price there is a two dollar per head drop in the price feedlot operators are willing to pay for feeder pigs.

The production of ethanol will hurt livestock markets, family farms, and feedlots. The state of Missouri has six ethanol plants. The ethanol plants are found in the northern half of Missouri where the corn yield is the greatest.

There are many current laws in Missouri regarding ethanol. The main bill is House Bill 1270. The law requires that all gasoline sold in Missouri after January 1, 2008, to be an ethanol-blend containing at least 10% fuel ethanol. This bill was sponsored by Representative Bob Behnen from Kirksville, Missouri. Since the countries he represents produce large amounts of corn, it makes sense that he would sponsor such a law. There is a law in the Missouri Senate that would appeal this law. Senate Bill 11 would repeal the Missouri Renewable Fuel Standard Act.

Ethanol has local benefits, but it also has local costs. Now we will evaluate the national effecs of ethanol.

Ethanol policy is important because the United States plays a huge role in the world economically as well as in terms of energy consumption. Ethanol policy has great implications domestically and globally. In analyzing this policy, we can definitely gain greater insight as to whether or not ethanol is a viable solution for the world's energy needs.

The basic need being addressed by U.S. ethanol policy is the need to significantly reduce dependency on oil for fuel via increased production and use of ethanol. The need to break this dependency is based around three key issues: the rising costs and other economic concerns of oil use, the environmental effects of fossil fuel based energy and the dependency on foreign imports that comes along with massive oil consumption.

This policy is best reflected in the Energy Independence and Security Act of 2007 which included a provision calling for an increase for domestic production of biofuels, from 4.7 billion gallons in 2007 to 36 billion gallons in 2022, a significant amount of which would be corn-based ethanol.

So how do we plan to achieve this plan? Massive production of corn, more specifically corn that is intended for use as ethanol. By encouraging domestic farmers to produce more corn, the United States government hopes to break away from the foreign economic dependency that goes along with oil consumption.

So how are United States farmers being encouraged to increase corn production? Subsidies: a big part of the current U.S. energy policy is based around large-scale increases of subsidies to farmers who can produce biofuels, especially corn-based ethanol.

Some of these subsidies currently being enforced for ethanol production include:

Tariffs-taxes placed on goods as they are imported and exported. Currently, the United States enforces a $.54 cent tariff on every gallon of imported ethanol
Tax credits for ethanol producers
Renewable fuels standards-minimum consumption per year of fuels like ethanol or biodiesel that are renewable.

And these are just a few basic examples of the many ethanol subsidies provided by the United States government at various levels, all put in place to encourage corn for ethanol production.

So who all receives these subsidies for increased ethanol production? Everyone. Well more specifically, almost everyone involved in the process of getting corn from the ground, turning it into ethanol, and then making sure that the ethanol gets in our vehicles. These include farmers, blender, producers, even those who purchase biofuel. Ultimately, the goal of these subsidies is to encourage the consumption and production of ethanol and other biofuels by lightening the economic load, as well as creating the most profitable situation for those who consume and produce ethanol.

So is all this subsidizing worth it? That is, do the means the United States employ to encourage ethanol production and consumption feasibly accomplish the goals of the policy as well as have a beneficial effect on the country? To best answer this question, we need to look at how realistic our ability to meet the policy's goals is and the overall effects that increased ethanol production have on various parts of our society.

Overcome high oil prices-as much as generous subsidy stacking does to lower the cost of ethanol for American citizens, this strategy serves to be counterproductive in results in price increases elsewhere. The rise in the cost of corn especially is of concern, and the subsequent rise in the cost of corn products and the meat from animals that rely on corn for feedstock. While we may be paying less for energy, we're paying more for food.
Environmentally friendly energy-while ethanol does burn cleaner than fossil fuels, the basic truth is, ethanol gives off less energy than fossil fuels; the process for making ethanol even requires more energy that it produces. Furthermore, a great deal of farming involved in the ethanol process makes use of fossil fuel driven machinery. Though ethanol in itself may be more environmentally friendly than fossil fuels, the need to produce excess amounts of it to make up for the energy deficit, along with the environmental costs of producing ethanol greatly undermines its environmental benefits.
Dependence on foreign oil imports-if oil were to be completely replaced by ethanol for vehicles in America, it is estimated that over 90% of American land area will be needed to produce the corn for that much ethanol. While complete replacement of oil by ethanol is a pretty unrealistic goal, that staggering figure of the land required for it indicates that with any reasonable amount of corn for ethanol production would still result in us having heavy dependence on foreign energy.

Beyond the goals of the US policy on ethanol, increased production of ethanol, along with the related subsidies and support of production has affects several other aspects of our society.

Our food prices-as mentioned before, the increase in use of corn for non-food purposes is causing an increase in the price of corn and products domestically and worldwide. The fact more of the yield of corn crops are being focused within the US results in less exports of corn, raising corn prices even more for international markets. Furthermore, the increase in price of corn as a feedstock is being taken out on consumers in the form of raised prices in animal food products such as beef and milk.
Our farm industry-though rises in the price corn related products may be negative for consumers, the high prices, as well as the massive profitability caused by the various subsidies on the ethanol industry, are resulting in an increase of farmer income. However, this results in more detrimental effects on the consumer, as more farmers are growing corn products, resulting in a drop in the amount of non-corn crops being farmed, ultimately raising their prices as well.
Our wallets-along with the rise in food prices affecting Americans economically, the very subsidies that are causing the rise in food prices place them under further financial strain. Billions of dollars in taxpayer money are being dedicated to ethanol subsidies, coupling with food prices to increase the overall economic burden placed on American consumers.

So is ethanol a viable solution? From the research I've done the answer seems to be no. However, the general population seems to be split, weighing in the economic factors against the environmental factors; at least on a national level. The answer to the question seems to be less ambiguous when considered on a global scale.

Right now, the government is backing ethanol because of its environmental benefits, economic benefits, and security benefits. However, these benefits might not be all they are cracked up to be.

Although Ethanol is supported by many in the U.S. because it is supposedly environmentally friendly, studies show that "E85 (85% ethanol fuel, 15% gasoline) may increase ozone-related mortality, hospitalization, and asthma by about 9% in Los Angeles and 4% in the United States as a whole relative to 100% gasoline"

Effects of Ethanol (E85) versus Gasoline Vehicles on Cancer and Mortality in the United States

Mark Z. Jacobson* Department of Civil and Environmental Engineering, Stanford University, Stanford, California 94305-4020 Environ. Sci. Technol., 2007, 41 (11), pp 4150-4157Publication Date (Web): April 18, 2007

Ethanol also isn't the economic savior that it is made out to be: Ethanol varies in price- it can be slightly cheaper or slightly more expensive than Gasoline. However, because ethanol contains about 30% less energy than Gasoline does, the cost per mile driven is actually MORE expensive when you use ethanol. Over the course of a year, even assuming that ethanol is cheaper in the area, using E-85 fuel will add roughly $200 to the cost of fuel for one car. http://www.hybridcars.com/ethanol/benefits-drawbacks.html

Ethanol is a less reliable fuel source than Gasoline: It would take all the corn in the country to displace about 3.5 percent of our gasoline consumption - only slightly more than we could displace by making sure drivers' tires are inflated properly. There are also ethical considerations. In particular, the United States is responsible for over 40 percent of the world's corn supply and 70 percent of total global exports. Even small diversions of corn supplies to ethanol could have dramatic implications for the world's poor, especially considering that researchers believe that food production will need to triple by the year 2050 to accommodate expected demand. Furthermore, ethanol would not necessarily be a more reliable source of fuel. By displacing gasoline with ethanol, we are displacing geo-political risk with yield risk, and historical corn yields have been about

twice as volatile as oil imports.- cato institute.

Let's focus on the food for a minute- The US exports 40% of the world's corn. In contrast, OPEC exports only 35% of the world's oil. Imagine if opec decided to make something else with all of their oil, and started funneling that resource away from the rest of the world. That's what we're doing with our corn. The only difference is, we are affecting the poorest of the poor. http://www.cnbc.com/id/17613845/

For Example, Look at Haiti. Right now, there is a famine because food prices have been driven up, in part because of the biofuel movement. The children over there make "cookies" out of mud, shortening, and salt in order to stave off hunger pangs.

We've shown that the U.S. doesn't receive any major economic, environmental or security benefit from switching to ethanol. In fact, the only major benefit seems to be that we feel better about ourselves because we FEEL like we're doing something that's eco-friendly. We have to ask ourselves: are our "warm fuzzy" feelings worth forcing a Hatian child to eat dirt? This group doesn't think so.

Looking at ethanol from a global perspective is relevant to Missouri State University's public affairs mission because in order to be ethical leaders who are culturally competent and involved in their community, One must scientifically evaluate all levels of a situation and act in accordance with whatever does the most people the most good. This paper is founded on that principle,and the students who wrote it hope that in the future, the U.S. will begin to act in line with these principles.

Large list of various works consulted in various ways:

http://www.mocorn.org/index.php?option=com_content&task=view&id=7&Itemid=6

http://www.ncga.com/node/55

http://www.afdc.energy.gov/afdc/about.html

http://www.ethanolrfa.org/ethanolreport/2008/03/

http://www.ethanolfacts.com/ETHL2008/downloads/EthanolEconomics.pdf

http://en.wikipedia.org/wiki/Ethanol_fuel_in_the_United_States#Current_trends

http://www.ers.usda.gov/AmberWaves/April06/Features/Ethanol.htm

http://healthandenergy.com/ethanol.htm

http://www.google.com/search?hl=en&rls=com.microsoft:*:IE-SearchBox&rlz=1I7RNWO&ei=dh75SZqoF4vWM8WKpFw&sa=X&oi=spell&resnum=0&ct=result&cd=1&q=increases+of+corn+production+for+ethanol&spell=1

http://www.ncga.com/ethanol-public-policy

http://www.globalsubsidies.org/files/assets/pdf/Brochure_-_US_Report.pdf