If you want a good symbol of almost everything that's wrong with government, try ethanol.
Some of my fellow Iowans will probably call me a traitor, because ethanol has become not just big but mega-business for many in the Hawkeye State. But not for everybody-and that's where there are important lessons to learn.
Ethanol, of course, is a plant-based automotive fuel, used increasingly in recent years as an additive to or even a substitute for petroleum-based fuels like oil and gas. In the United States, ethanol has been developed primarily from corn-just because that crop is so plentiful. But it can also come from soybeans, from cane, and from various grasses.
The promise that we might more and more be able to tell our friends in the Middle East (and in Venezuela) that we really don't need their oil, thank you very much, because we've learned how to grow all the fuel we need in our incredibly productive Middle West-well, that's a pretty tempting item to pursue. And especially when the price of regular gas tops $3, as it did for a while last year, the enticement to cash in your oil pumps and replace them with a fleet of John Deeres gets sweet indeed.
I only wish that the scenario worked. I really desperately wish that. I wish it for our nation's sake, and I am still loyal enough to my home state that I wish it for their sake. I wish the farmers I know there could become the heroes who could step in and, with a corn picker instead of an Abrams tank, solve some of our most intractable international crises.
But all the evidence says that-at least so far-ethanol really doesn't work. At least, not without a big boost from Uncle Sam. As I understand it, the argument for ethanol has three major flaws.
The first is that it takes so much fuel to produce the kind of ethanol that cars and trucks can use. Those John Deere tractors and all the related farming and refining equipment gulp up a lot of fuel in the process of making the ethanol. In fact, most experts say it takes about a gallon of petroleum-based fuel to manufacture 1.3 gallons of ethanol. It's not an attractive ratio. Every time you fill your tank with 20 gallons of ethanol, you have to stop and consider that it took 15 gallons of petrol to make the ethanol to which you were just so patriotically loyal.
That's not all, though. Experts also say that gallon-for-gallon, ethanol isn't as efficient a fuel as gasoline. Most research suggests it takes 11 gallons of ethanol to go the same distance that 10 gallons of petroleum will take you.
But I've saved the worst problem for last. Except for federal subsidies, every gallon of ethanol that's been sold in the United States would have cost about 50 cents more than it actually sold for. The government can do that for a while, and most people tend to play along with the pretense. The farmers like it, of course, and the artificially high price they get for their corn makes up for some of the hard years they've suffered. The ethanol industry likes it too, and there are lots of new jobs in places where jobs had been disappearing. But wherever subsidies go, people tend to forget what things are really worth. They forget for a while-but then the realities of the free market jump in to set the record straight.
That's what's happening right now. Ethanol gobbles up so much corn every day that the price of corn has jumped to record highs. Farmers who grow corn like that, but people who raise livestock don't because they have to pay more for the corn they feed their cattle and pigs. The bacon you enjoy for breakfast just got a little pricier; so did your Kellogg's corn flakes.
It always seems so simple when Uncle Sam steps in to add his assistance to a project as attractive as ethanol. But it never ends up being as simple as it looks. A series of chain reactions is launched such that no human being could possibly predict all the results. Nor is it remotely possible for a government to be fair in what it does. "Oh, the farmer and the cowman should be friends," proclaimed the great musical, Oklahoma. But Rodgers and Hammerstein were probably a good bit better at that assignment than Uncle Sam will ever be. Ethanol might still earn its keep if it just reminds us of that unchanging truth.