The government got it wrong again. Ethanol produced from corn, or any other substance, is not the answer to the world fuel shortage and the high prices the shortage generates. An MSNBC article and a Fox News column fill in the details. Using corn for fuel is not expected to alleviate the fuel shortage, but it has and is expected to continue to cause a world food shortage. Some even say that we should start hoarding nonperishable foods.
This is a prime example of what can happen when the government interferes in the market. Without the government ethanol mandates and subsidies the diversion of corn from food to fuel would not have proceeded at the current pace and we wouldn’t be facing a food crisis.
On the other side of the coin the federal and state governments are shutting off cheaper sources of fuel and other energy. They are restricting the exploration and development of new oil supplies and are restricting the building of new nuclear power plants. They won’t allow us to tap the massive supply of oil in the lower Gulf of Mexico because some Florida beach might get a few dark spots. All the presidential candidates have said they won’t allow the extraction of the huge oil reserves from the Arctic National Wildlife Refuge because it might upset a few animals.
What good is a pristine stretch of beach in Florida if you can’t afford to drive there to enjoy it? How much food can you grow on a white sand beach? The Florida tourism economy is likely to be hurt as much by high fuel prices as spoiled beaches. Do you think the ANWR animals might choose to learn to live with a few oil wells and pipelines rather than be slaughtered for food?
We should be reducing government interference in energy, food and other markets instead of calling for more controls. National and world markets are too complex for a few officials to be able to manage them effectively. Consider the orange juice market. The Juice Authority sets the price of a gallon of OJ at X dollars. The JA then has to (1) issue a specification for the quality of OJ to prevent its producers from watering it down, (2) establish an inspection agency to see that the specification is met, (3) set prices for the oranges and other supplies that are needed to produce the OJ, (4) set prices for the seed, fertilizer and equipment needed by the orange growers, (5) set prices for the supplies needed by the orange growers’ suppliers, and on and on down the chain.
So, setting the price of OJ means that the price of steel must also be set, because it is needed to build the equipment used by the orange growers. The price of fuel must be set, because it is used in large quantities by the orange growers and the truckers that haul the oranges to the OJ producer’s plant. If all these and other prices aren’t set correctly the OJ production process will break down and no more OJ will be produced — unless Congress also gives the JA the additional power to force the OJ producer and all the suppliers to continue the process at a loss. Then we have socialism in all its faded glory. And this is what Barack Obama wants to give us if he becomes President.