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Friday, July 13, 2012

The Coming Food Inflation Caused By DOE

In case Congress and the DOE hasn't noticed there is a drought in the midwest. Before we begin the orgy of long term forecasts replete with sinking islands, melting glaciers, and drowning polar bears could we, please, try our luck with near term predictions. Even DOE Secretary Steven Chu should know in October we have something in the midwest called a harvest. During harvest, crops of all sorts but in this case corn is picked, combined, dried, and sold and this October the corn crop is going to be relatively meager or about 12% less than last year. I'm sure Secretary Chu does know that the ethanol mandated by his agency is made from corn and tax dollars. Prior to the enlightenment when a sane people thought burning a huge portion of a food crop was both a sinful waste and tantamount to lunacy a lean harvest meant higher food prices. What then can we expect this year, when the government of the United States in it's infinite wisdom, mandates that 30% of a scarce commodity be used as transportation fuel? I suppose we'll hear that any hardship can be avoided by cutting back on the beef, chicken, and pork in our diets and anyway the country has an obesity problem but we need to spend more money on food stamps since food prices are up for everyone but the taxpayers.
The excuse we are going to hear in September as corn prices and food prices drift up is no one expected this calamity. If Secretary Chu can't see this coming he should maybe send someone over to the Department of Agriculture where presumably they know as much about these things as they do food stamp parties. Presumably USDA has a economist that could tell Chu how much more the taxpayers will be paying for  food because of the impending corn shortage and the ethanol mandates. In a world not driven by ideology DOE would suspend the mandate which is in its power but expecting an institution that thinks its green loan programs have been an 'enormous success' to behave rationally is a bit much. The people who can calculate the rise in global temperature a hundred years out can't see food prices going through the roof by Christmas?
The argument that without ethanol the country would face a gasoline shortage is a non starter. What fuel is derived from biomass? Methanol or wood alcohol. Is there any other way to get methanol? There sure is and the country is up to its ears in the stuff. It can be synthesized from methane as in natural gas by replacing one of the four hydrogen atoms in the molecule with one hydroxyl ion (OH). I admit that there is not an existent infrastructure to crack methane molecules on such a large scale but why neglect a cheap source of fuel in the future? In any event there will be a very heated debate about how DOE burns money on green failures while the country suffers food inflation.

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