If Squanto hadn’t given corn to the Pilgrims, there’d be no Thankgiving. Corn makes
the perfect flake for America’s breakfast table. It produces oil that let’s us pop our favorite matinee snack, and without it, corn bread would have an identity crisis.
Corn is America’s super crop. It seems that corn can do anything. In addition to food, it’s used in everything from adhesives and antibiotics to explosives, insecticides and shoe polish.
Now with gasoline and other fuel prices hitting all time records, we want to put a cape on the cob to fight our energy battles.
If you haven’t already guessed, I’m a card-carrying “tree hugger.” I’m also a fan of the family farmer. But corn as the savior of our energy woes is a really bad idea.
Producing corn is very energy intensive, and uses fossil fuels in virtually every step
of the crop cycle: transporting and planting the seeds; operating farm equipment; making and applying fertilizer; and transporting the corn to market. Fertilizer, herbicide, and insecticide production consume the most fossil fuels.
Fossil-fuel based fertilizers also contaminate the soil and groundwater, but they can not be replaced by natural fertilizer: there are not enough animals to provide the fertilizer to grow the corn necessary to produce all the grain-based ethanol needed to run American cars. And the herbicides and pesticides necessary to grow corn at an industrial scale leach into the groundwater, too.
Whether or not ethanol production from corn is efficient is debatable. Proponents of corn-derived ethanol point to studies emphasizing an overall net positive energy
creation. The naysayers claim that when the complete production costs of farming, seed, fertilizer, pesticides, fuel, ethanol distillation, etc... are taken into consideration, ethanol utilizes 30% more energy to produce than it creates. Ethanol proponents counter that this corn-based fuel reduces our carbon “footprint” and lowers greenhouse emissions because it recycles the carbon dioxide absorbed the plants during the growth cycle.
The economics of ethanol production is staggering. The estimated cost of building a single 100 million gallon ethanol plant is $140 million. Annually, the cost of natural gas to operate the plant ranges from $15-$25 million. A plant of this size will use nearly 2 million gallons of water per day. This is about 1700 gallons of water for
every gallon of ethanol produced. Corn is already one of our most water intensive crops. With full scale ethanol production, the water numbers are mind numbing.
Ethanol, even in gasoline blends, cannot be shipped through the country's existing gasoline pipeline system because it is easily contaminated by water and corrodes the pipes. Presently, there are no working ethanol pipelines anywhere in the world. Corn-based ethanol is currently shipped by truck or rail car to fuel distributors, who then mix it with gasoline before delivering it to filling stations in more trucks. This adds to the cost of ethanol and to its overall CO2 emissions. In order to use
ethanol on any large scale, transport vehicles will either have to be retrofitted for ethanol, or the government will be forced to build or subsidize pipelines.
Although auto makers like GM’s Chevy boast about their “flex-fuel” capability, less than 4% of America’s 135 million cars are equipped to run on E-85 (15% ethanol mixed with gasoline). Even if your Chevy pick-up is E-85 compatible, finding a filling station that carries this blend is like trying to find ethics in Congress.
To be viable, corn-based ethanol will require massive federal subsidies. During 2007, ethanol production was subsidized to the tune of $3 billion. This is on top of the already $11 billion in annual subsidy raked in by corn growers. With corn prices at all time highs, the Hawkeye state is producing more millionaires per square acre than Silicon Valley.
When you factor in the effect of corn-ethanol on food prices and overall global food shortages, the debate takes on ethical dimensions that even I am not willing to tackle.
There are other, and potentially better alternatives to producing ethanol from edible food stocks such as corn. Many of these substitute fuel crops such as switchgrass can be grown on marginal land, require less water and external energy inputs. But that’s discussion for another day.
In the meantime, let’s keep corn where it really belongs, on-the-cob and in our breakfast cereals, and not in our gas tanks.
To learn more about my market recommendations, visit my website at:www.globewestfinancial.com.
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