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"Rather than saying ethanol production creates jobs or lowers
the price of gas, ethanol proponents will need to justify the
subsidies along the lines of national defense or creating a
lower-cost industry for the future," said David Bullock, an
associate professor in the Department of Agricultural and
Consumer Economics. At a recent U of I conference,
"Sustainable Bioenergy: Focus on the Future of Biofuels and
Chemicals," Bullock presented a paper he co-authored with
colleague Peter Goldsmith. They addressed the politics and
policies of bioenergy production in the United States.
"Are there enough environmental benefits from the use of
ethanol and other biofuels to justify the subsidies? Are there
good reasons to subsidize the Midwestern rural economy at the
expense of the rest of the country?" Bullock asked. "These
questions are unanswered at this point."
Bullock termed the politics surrounding biofuels production
as "colorful" and "complicated." Both proponents and opponents
have made claims sometimes founded in dubious research. The
situation is complicated by avoiding discussions of the
trade-offs inherent in government support for a specific
industry or region.
Additionally, policies that on the surface seem to affect
only bioenergy markets actually affect many markets.
"There are many markets linked to bioenergy markets," Bullock
said. "When you raise the price of corn, for instance, by
subsidizing ethanol production, you impact many other markets."
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 Net job creation claims for ethanol are based on economic models
that are speculative, he noted. These models don't account for the
lost tax revenue, from the rebates given ethanol producers, that
could be used for other needs.
"When you implement these policies you have winners and losers,"
he said. "The Midwestern rural areas are clearly winners because the
tax dollars that support these programs are coming from other areas
of the country as well.
"When are such policies appropriate, and when are they wasteful?
Government subsidizes many things -- national defense, national
parks, education, infrastructure and targeted industries -- and none
of these are necessarily bad things. But you have to have reasons
for doing so."
The idea that ethanol will, by itself, produce lower gas prices
is false, he noted.
"It will be a long wait before U.S. farmers can produce energy
more cheaply than the Saudis can pull crude oil out of the desert,"
Bullock said. "Pulling it out of the desert is cheaper than trying
to grow energy through corn.
"And if the price of crude oil does go down too low, the price of
ethanol won't pay the producers' costs to grow corn."
Bullock indicated that those involved in promoting biofuels need
to clearly define the reasons for the redirection of resources and
funds involved in government support for a specific industry.
[University
of Illinois College of Agricultural, Consumer and Environmental
Sciences news release] |
