Thursday, May 1, 2008

Hero to Villain in half a gallon

In a world sinking under the weight of its computing power, where one can learn and communicate information almost before it happens, why do some things seem to catch us unawares? It wasn't that long ago that the financial folks were gladly handing out loans to anyone who could sign their name using a variety of financial "products" like 125 % mortgages. All of a sudden there is a mortgage crisis and all those smartly dressed banking chaps are wearing a sheepish look as if to say they had no idea how it happened. Now the world is suffering a "silent tsunami" (overused word) of a food crisis. How do these things happen so suddenly? Well they don't really but it is the manner in which events are managed and reported that gives the impression that they are sudden and unexpected. Folks at Enron knew very well what was going to happen and manipulated the situation to suit themselves; to outsiders the inevitable collapse was sudden and unexpected. Much the same picture could be drawn in the banking cartel: collapse was inevitable and anticipated by the insiders, yet the ship sailed on; after the denouement, the hapless homeowners and taxpayers pick up the bits. The food thing is a bit more complicated. Weather, and inevitably climate change, can be blamed.

So can ethanol.

It seems just a few years ago that I attended a lecture at the COD about global warming (really before the mass publicity) at which the virtues of using corn rather than fossil fuels were being touted as a means to both energy independence and carbon neutrality. Both of course are wrong when a proper look is taken. Ethanol became the saviour and there was E85 and of course in Illinois the ethanol plants popped up like mushrooms and our politicos supported it (still do). Now it is the villain of the piece, blamed for rising grain prices with all sorts of knock-on effects to other crops since farmers want to grow corn rather than soy for example. Now the environmentally conscious Euros are complaining about the dumping of all those subsidized biofuels made in America. What is becoming clear now should have been obvious back in the day. Ethanol from corn was never going to be carbon neutral; it was never going to provide energy independence; it was never going to be economic (thereby introducing the absurd policy of subsidizing something really, really bad).

But the corn to ethanol thing is only one aspect of the dark side of biofuels. All over the world disastrous things are happening as various countries are trying to get into the act, destroying natural vegetation and habitats in misguided attempts to contribute to the biofuel supply by planting new crops to convert to ethanol. If this is motivated by the goal of carbon neutrality and energy savings it cannot be more disastrously wrong, because neither is likely to be achieved by turning peat bogs or forests into some other crop.

Meanwhile people whine about $4 a gallon and Presidential candidates want to save people money by waiving taxes. What would that accomplish? The wrong thing. To put it in perspective the European price is about $8 a gallon so there is a long way to go. Prices must increase to encourage conservation and efficiency, not decrease to promote consumption, which would make things worse. The chickens are coming home to roost after decades of squandered opportunities to develop rational alternatives to the American lifestyle: excessive consumption, grossly over-sized homes, grossly over-sized vulgar (more to the point) cars (Hummers etc.), absurd commutes, neglect of transportation infrastructure.

My main complaint is that the prices of Three Floyds have increased through all this. How about a subsidy for craft brewing?

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