The Sin of US ethanol subsidies
Posted by WARREN MOSLER on 20th April 2011
The reality if very simple, and there is no end in sight.
The US is a net exporter of food, and a net importer (directly and indirectly) of motor fuels.
So with current high gasoline prices we get a higher price for our food surplus by burning up part of it for fuel.
Even if the energy used in creating the ethanol is somewhat more than the energy produced, the energy used is generally coming from lower cost and domestically produced sources such as coal. And the fuel burned in our cars replaces gasoline- a much higher cost energy that we import.
So, bottom line, burning up part of our surplus crops as motor fuel, which drives up food prices world wide, we reduce imports of motor fuels and we get a higher price for the remaining foods we export.
That is, we benefit economically from the global chaos and the likelihood of mass starvation created by this policy.
:(
Posted in Comodities, trade | 46 Comments »