Friday, April 25, 2008

Congresswoman Schmidt and her colleagues support ethanol policies that lead to higher food prices

Via the Washington Times (empahsis added):
While farmers here and abroad generally are benefiting from the high prices, even they have been burned by a tidal wave of investors and speculators pouring into the futures markets for corn, wheat, rice and other commodities and who are driving up prices in a way that makes it difficult for farmers to run their businesses.

"Something is wrong," said National Farmers Union President Tom Buis, adding that the CFTC's refusal to rein in speculators will force farmers and consumers to take their case to Congress.

"It may warrant congressional intervention," he said. "The public is all too aware of the recent credit crisis on Wall Street. We don't want a lack of oversight and regulation to lead to a similar crisis in rural America."...

...U.S. wheat stocks are at the lowest levels in 60 years because worldwide consumption of wheat has exceeded production in six of the past eight years, said U.S. Agriculture Department chief economist Gerald Bange. Adding to tight supplies was the back-to-back failure of two years of wheat crops caused by drought in Australia, a major wheat exporter, he said.

In addition, the diversion of one-third of the U.S. corn crop into making ethanol for vehicles has increased prices for corn and other staples such as soybeans and cotton as more acreage is set aside for ethanol production...
"Congerssional intervention" is what got us in this mess in the first place. From a Congresswoman Jean Schmidt Press Release (June 8, 2006) (emphasis added):
...The rising cost of gasoline, the desire for energy security, and an interest in a cleaner environment are enabling ethanol to emerge as a leading candidate to replace gasoline as the fuel of choice for motorists.

U.S. consumption of ethanol last year reached 4 billion gallons, which is double the amount sold in the year 2000. In an effort to maintain this tremendous pace of growth, The Energy Policy Act [ed.:
SEC. 1501. RENEWABLE CONTENT OF GASOLINE], signed on August 8, 2005, establishes minimum requirements for the amount of renewable fuel that must be included in gasoline...

...New and expanding markets that create additional demand for corn and other crops will invigorate farm production. That would mean more money pumped into our American economy and less money going to OPEC.
The Law of Unintended Consequences is in full bloom. Ms. Schmidt took her office in September of 2006 shortly after The Energy Policy Act was voted on by Congress in July of 2005, but her press release clearly documents her support for the policy's mandates. And she and her colleagues must bear the blame that comes along with mucking up the free-enterprise system.

Update: Ethanol and Other Biofuels: A Global Warming Solution Worse Than the Problem


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