More questions about ethanol as ‘the answer’

Consumer Reports published an article last fall concluding that ethanol was not the answer to energy independence for the United States (see Sept. 14, 2006, NPN MarketPulse). Now U.S. News & World Report arrives at a similar conclusion in the cover story of its Feb. 12 issue.

“A new ethanol surge could cause more problems than it solves,” according to U.S. News & World Report. The magazine noted that last year the ethanol boom “gobbled up 20 percent of the U.S. corn crop.”

The ethanol industry’s demand for corn is putting pressure on other producers who rely on it for feed for dairy and beef cattle, pigs, and chickens, the magazine reported. “Meat, dairy, and egg producers are feeling pressure as corn prices have doubled in one year – now trading above $4 a bushel for the first time in more than a decade,” the magazine reported.

The impact will become obvious to consumers when meat prices rise sharply at the start of this summer's grilling season, according to the magazine. "The American consumer is making a choice here," Dick Bond, chief executive of Tyson Foods, told the magazine. "This is either corn for feed or corn for fuel." He indicated his company intends to be active in the farm bill debate on Capitol Hill, and some livestock groups recently wrote a letter to warn the secretary of agriculture of their concerns.

Ethanol production could consume half of the U.S. corn crop as early as 2008, Lester Brown of the Earth Policy Institute told U.S. News & World Report. "We used to have a food economy and an energy economy," Brown told the magazine. "The two are merging. We need to...think through carefully what we're doing."

A push for E-85 points up the limits of an ethanol-fueled future, according to the magazine, which reported that E-85 is available in only 1,000 of the nation's gas stations. According to the Petroleum Marketing Association of America, a trade group, there are 168,000 sites that retail gasoline in the United States.

According to the news magazine, the House of Representatives is likely to pass a bill this year that will direct federal agencies to figure how to make the switch to ethanol more cheaply.

Consumer Reports tackled what it called the “ethanol myth” in its October 2006 cover story. It concluded that using E85 “will cost consumers more money than gasoline and that there are concerns about whether the government’s support of (flex-fuel vehicles) is really helping the U.S. achieve energy independence.”

Consumer Reports’ editors tested a 2007 Chevrolet Tahoe FFV and found that the SUV’s fuel economy plunged 27 percent while using E85. Overall economy fell from 14 mpg to 10 mpg, “the lowest fuel mileage we’ve gotten from any vehicle in recent years,” the magazine noted.

Consumer Reports also cited a Union of Concerned Scientists study that government support of E85 is causing more gasoline consumption, not less. Automakers get fuel-economy credits for producing flex-fuel vehicles, and those credits allow the companies to build more cars and trucks with low mileage ratings.