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New study: Ethanol costs one million jobs

By Dennis T. Avery
web posted November 12, 2012

If President Obama still cares about more U.S. jobs and high food costs he can now immediately gain on both.. An economist in Indianapolis just calculated that the U.S. is losing a million jobs this year—along with $30 million in economic growth—because we shifted too much of our corn into ethanol. Tom Elam says direct employment in the food industry would have produced three times as many jobs processing and marketing meat as making ethanol from the same corn. Elam calculates the foregone jobs at 941,000. That doesn't even count the myriad of jobs that would have been needed to support the newly employed one million Americans.

Based on recent history, U.S. consumers got less meat and milk than they would have liked. Consumer spending on these items veered sharply down from its historic trend after President Bush radically raised the nation's ethanol mandate in 2007. Elam predicts these problems will only get worse. The  EPA‘s approval of 15 percent ethanol in gasoline will likely push corn fuel use up faster than corn yields are rising.

Without the ethanol mandate, U.S. feed exports would increase too (a job creator). Also, our cost of driving would come down even as the prices of pork chops, broilers, and hamburger came back within the reach of stressed-out US food buyers.  

No need to worry about Green protests on this one. The environmental groups have turned against the "renewable" fuel they once supported. Ethanol does little to reduce U.S. greenhouse emissions, but diverting  grain from to fuel is ramping up survival costs for the poor across the world.

Naomi Klein, a best-selling "green" author from Canada, says climate change is not a big issue to the left. Rather, "ideology is the main factor in whether we believe in climate change. If you have an egalitarian and communitarian worldview, and you tend toward a belief system of pooling resources and helping the less advantaged then you believe in climate change." But there has obviously been no warming trend on the planet for 15 years, and the U.S. unemployment problem is now center stage. Especially for the lower income workers who are prominent in food processing and transport.

 Grain farmers are bidding up the prices of their own cropland to twice the 2006 levels—cleverly raising their own corn production costs for the future. Meanwhile the more numerous livestock farmers risk bankruptcy due to redoubled feed costs. Congress is urgently studying a further bailout of dairy farmers, who can no longer afford to feed their cows.  But the nation's debt limit is looming.

Even after this drought-stricken corn-growing season, the EPA has refused to suspend the ethanol mandate. The EPA has apparently feared perceived failure of a "green fuel" program on President Obama's watch. A word from the President could set Lisa Jackson's mind at rest, and create those additional jobs in short order.

However, a temporary suspension of the ethanol mandate is unlikely to work. Temporary moves are discounted by business, as the President found with his stimulus spending. The President should now lift the ethanol mandate as a waste of taxpayer money, a drag on blue-collar job creation—and a threat to many thousands of livestock farmers. To add insult to injury, ethanol is expensive to make and has 35 % fewer BTU's per gallon. The EPA approved 15% blend will melt fuel lines and burn valves in many cars. Who will pay for the repairs? ESR

Dennis T. Avery, a senior fellow for the Hudson Institute in Washington, D.C., is an environmental economist. He was formerly a senior analyst for the Department of State. He is co-author, with S. Fred Singer of Unstoppable Global Warming Every 1500 Years. Readers may write to him at PO Box 202 Churchville, VA 2442; email to cgfi@hughes.net or visit us at www.cgfi.org

 

 

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