Martyn, what a great article to post! The money quote for me:
The World Bank has estimated that in 2001, 2.7 billion people in the world were living on the equivalent of less than $2 a day; to them, even marginal increases in the cost of staple grains could be devastating. Filling the 25-gallon tank of an SUV with pure ethanol requires over 450 pounds of corn -- which contains enough calories to feed one person for a year. By putting pressure on global supplies of edible crops, the surge in ethanol production will translate into higher prices for both processed and staple foods around the world. Biofuels have tied oil and food prices together in ways that could profoundly upset the relationships between food producers, consumers, and nations in the years ahead, with potentially devastating implications for both global poverty and food security.
So much of our environmental, economic, and developmental policy is reactionary. Government is about the worst forum for acting in a proactive, premptive, forward-thinking manner. There is very little consideration given to unintended consequences.
Government thinking looks like this:
1. Fuel prices are rising and voters are unhappy
2. Voters like the idea of energy independence and paying less at pump
3. Politicians see that ethanol will reduce dependence on oil yet is economically unsustainable
4. Government subsidizes ethanol production thus artificially boosting the demand for ethanol and then corn
5. Corn prices skyrocket... feed prices rise, other grain prices rise, etc.
6. Costs are passed on to consumer in beef, dairy, grains, etc.
7. Final outcome... see the last sentence of quoted paragraph.
I know that the idea isn't popular with everyone, but private companies are the best means to more efficient resource consumption/production.
Private business thinking looks like this (ideally):
1. Fuel prices are rising and that cost has to be passed on in our products/services
2. Consumers aren't happy with rising prices and our demand shrinks
3. Private business must find cheaper alternative or more efficiency in production/service
4. Product/services prices decrease or stabilize
5. Final outcome... more efficient production/service. Economic and environmental sustainability are advanced.
Now I know that this is the ideal situation, but for the most part it holds true. The problem is when the government does something like subsidize research or mandate restrictions... the cost will always be passed down to the consumer through taxes or high prices. I'm all for regulations, but subsidization and mandates often have unintended consequences.
Just some quickly-thrown-together thoughts. Again, great link Martyn!
Joel
