Dousing ethanol with truth

For many years, the environment was simply a political non-issue.
Environmentalists, on the whole, were seen as fringe interest groups, with little to no public support behind their proposed initiatives. In the past two years, thanks in part to inclement weather shifts, environmental disasters and Al Gore, environmental degradation has finally burst into the political limelight, and politicians are jumping on board.
Unfortunately, recent evidence suggests that, as always, politicians ought to look before they leap.
"I have a glass of ethanol every morning before breakfast," said John McCain, an Arizona Republican senator.
McCain made his remark to The Globe and Mail during a recent swing through Iowa, the corn-growing heart of America's booming ethanol industry. Of course, Senator McCain's recent conversion to the cause of ethanol likely had something to do with his presidential campaign, in which Iowa's presidential primaries are seen as the important first battlefield.
There are very few critics of ethanol's role as a sustainable, carbon neutral alternative to gasoline. In fact, its adoption by the automotive industries and private sector is a success story for the cause of environmentalism.
Unfortunately for the ethanol farmers of Iowa, simply being green won't be enough to displace the titan that is the oil industry. The reason that gasoline is falling out of vogue so quickly has as much to do with the business of oil as it does with its environmental impact.
As reported in the The Brock Press, the price of oil is hitting record levels, even in compared to the inflation-adjusted heights of the '70s and '80s oil crisis. Not only has oil seen a rapid increase in price, it is routinely regarded as one of the least reliable commodities on the market.
Speculation, new discoveries, and international cartels conspire to ensure that oil prices remain among the world's most arbitrary.
But it is not clear that ethanol is any more secure or reliable than gasoline, according to new research by James Eaves, a finance professor at the University of Laval in Quebec City, and engineer Stephen Eaves.
Making too big a bet on ethanol would leave Canada exposed to weather-induced crop swings and tied to a fuel that at best can meet only a tiny fraction of demand, the pair concluded in a recent article in the Cato Institute's Regulation magazine.
"By displacing gasoline with ethanol, we are displacing geopolitical risk with yield risk," they argued. "And historical corn yields have been twice as volatile as oil imports."
In addition, it is not entirely clear that continued diversion of North American corn production into ethanol would be in the best interests of humanity. North America, according to the United Nations Development Programme, produces 47 per cent of the world's corn supply, the vast majority of which is consumed by the world's poorest nations.
If the recent spike of corn prices are any indication, widespread diversion to ethanol production could make corn prices unmanageable by those most vulnerable to food prices.
It is becoming clear that the issue of environmental sustainability is a Pandora's box of trade-offs, and the altruistic motives of the environmentalists will need to be weighed against the price of corn, a world staple.
As businesses, governments and individuals continue to seek respite from the vagaries of the oil market, one thing is obvious: the easy answers hide significant costs.