Tortilla Crisis

The folks pushing ethanol as an additive to gasoline are doing so with the intent to ease our need for foreign oil (and reward corn growers), but at the same time we're putting an increased demand on the commodity of corn, we're also raising prices worldwide for some of the poorest people who rely on corn as a staple food item:

Mexico is in the grip of the worst tortilla crisis in its modern history. Dramatically rising international corn prices, spurred by demand for the grain-based fuel ethanol, have led to expensive tortillas. That, in turn, has led to lower sales for vendors such as Rosales and angry protests by consumers.

The uproar is exposing this country's outsize dependence on tortillas in its diet -- especially among the poor -- and testing the acumen of the new president, Felipe Calderón. It is also raising questions about the powerful businesses that dominate the Mexican corn market and are suspected by some lawmakers and regulators of unfair speculation and monopoly practices.

Tortilla prices have tripled or quadrupled in some parts of Mexico since last summer. On Jan. 18, Calderón announced an agreement with business leaders capping tortilla prices at 78 cents per kilogram, or 2.2 pounds, less than half the highest reported prices. The president's move was a throwback to a previous era when Mexico controlled prices -- the government subsidized tortillas until 1999, at which point cheap corn imports were rising under the NAFTA trade agreement. It was also a surprise given his carefully crafted image as an avowed supporter of free trade.

A classic case of the law of unintended consequences. While we're filling up with gas that's part ethanol, people in other parts of the world may not be able to afford their most basic food item.

OpinionJournal.com also has a piece on the woes of ethanol, and besides the food problems in Mexico and elsewhere, there's this:

As for the environmental impact, well, where do we begin? As an oxygenate, ethanol increases the level of nitrous oxides in the atmosphere and thus causes smog. The scientific literature is also divided about whether the energy inputs required to produce ethanol actually exceed its energy output. It takes fertilizer to grow the corn, and fuel to ship and process it, and so forth. Even the most optimistic estimate says ethanol's net energy output is a marginal improvement of only 1.3 to one. For purposes of comparison, energy outputs from gasoline exceed inputs by an estimated 10 to one.

And because corn-based ethanol is less efficient than ordinary gasoline, using it to fuel cars means you need more gas to drive the same number of miles. This is not exactly a route to "independence" from Mideast, Venezuelan or any other tainted source of oil. Ethanol also cannot be shipped using existing pipelines (being alcohol, it eats the seals), so it must be trucked or sent by barge or train to its thousand-and-one destinations, at least until separate pipelines are built.

Wouldn't it just be easier if the environwackos would let us drill for our own oil offshore and in Alaska? At least poor people don't starve when we do that. Ethanol is clearly a Beltway fad that hasn't been completely thought out.