Scott Faber and Alex Rindler, July 29 – The federal corn ethanol mandate is prima facie evidence that the law of unintended consequences is always in effect.
Once heralded as a way to help farmers, reverse climate change and reduce America’s dependence on foreign oil, the mandate to blend up to 15 billion gallons of corn ethanol into gasoline every year has hurt more farmers than it has helped, increased greenhouse gas emissions and been rendered irrelevant by new fuel efficiency standards. Plus, the mandate has driven up food and gas prices, worsened air and water pollution and may soon void the warranties of millions of cars.
Few Americans imagined that the 2007 law to raise the amount of corn ethanol blended into gasoline would end up diverting 40 percent of the corn crop from feed and food to fuel. This diversion has dramatically increased the price of animal feed and pushed some livestock operators out of business. Although many factors influence commodity prices, U.S. Department of Agriculture’s chief economist testified last month that the corn ethanol mandate accounted for more than a third of the hike in corn prices from 2006 to 2009.