Corn Commentary

MSN Money Passes Buck on Ethanol

Nothing stirs the juices of resentment more than success. Clearly the success of corn ethanol has gotten to Ann Monroe, columnist for MSN Money. Describing corn ethanol as a practical, moral and environmental problem, Monroe threw all the punches she could muster in her column “Ethanol Reality Check.”

Anyone half-heartedly following the ethanol industry knows corn will account for 15 billion gallons of the 35 billion gallon renewable fuels standard called for in the 2007 energy bill. The rest will be produced through advanced biofuels such as cellulosic ethanol.

Blaming rising food prices on corn-ethanol production also shows Monroe failed to do her homework. Economists tell us that when the price of gasoline goes up by $1 per gallon, your $100 food bill goes up between 60 cents and 90 cents. When per bushel corn prices go up $1, your $100 food bill goes up 30 cents. That means a $1 increase in gasoline will squeeze your food budget two to three times more than a $1 increase in a bushel of corn.

In fact University of Nebraska-Lincoln economist Richard Perrin said recently that during a five-year period ending in February, ethanol was responsible for food prices rising by no more than 2 percent while total U.S. food prices went up about 16 percent.

And for full disclosure, Perrin notes his research and analysis were not funded by the ethanol industry.

It’s little comfort that Monroe is so concerned about our moral souls given the fact she knows nothing about corn or ethanol, and given this ignorance we’re more than a little disturbed that she’s doling out investment advice.

Read more:

• Playing the Blame Game

• Oil Company Profits Have Big Impact on Food Prices

• Ethanol Gets Bum Rap Expert Says

• Ethanol Is All It’s Cracked Up to Be