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The Candidate: Barack Obama (D)
The Issue: Ethanol Mandates/Subsidies
The Position: Supports
The Cost: $15 billion in higher food prices
annually (Source:
Heritage Foundation)
The Media Position: Mandate? What mandate?
The Issue
Environmental activists and
politicians tout “alternative fuels” as a way to reduce
oil’s contribution to carbon emissions and climate
change. Democratic presidential nominee Sen. Barack
Obama, Ill., has pledged to fund alternative fuels, even
though existing experiments in ethanol mandates and
subsidies have failed.
Alternative fuels were the
“wave of the future,” according to journalists and
environmentalists. The wonder cure could eliminate
dependence on foreign oil and lead to cleaner-running
cars, they said.
Congress mandated in 2005 that
7.5 billion gallons of ethanol – made from corn – be
mixed into the nation’s fuel supply by 2012. In 2007,
lawmakers upped the goal to 36 billion gallons by 2022.
Mandated use of ethanol has
resulted in $15 billion worth of higher food prices,
according to The Heritage Foundation. That amounts
to about $130 per U.S. household. It has also
contributed to global food shortages. One United Nations
official called the use of the crop for fuel a “crime
against humanity.”
Nevertheless, Obama has called
corn-based ethanol “only the beginning.”
“[C]orn-based ethanol is only
the beginning,” Obama said in a
February 2006 speech. “If we truly want to harness
the power of these fuels and the promise of this market,
we can and must generate more cellulosic ethanol from
agricultural products like corn stocks, switch grass and
other crops our farmers grow.”
He would
increase the government mandate requiring ethanol be
mixed in with the nation’s gasoline supply to 60 billion
gallons by 2030, nearly double the current goal of 36
billion gallons by 2022.
The Media Position
The broadcast networks were
originally supportive of ethanol as the “wave of the
future,” as Katie Couric called it on the NBC “Today”
show in May 2006. But over time they’ve connected
increased use of ethanol as a gasoline alternative or
additive to increased food prices.
Still, in 86 stories
mentioning ethanol between Jan. 1, 2008, and Sept. 30,
the broadcast networks connected increased consumption
of ethanol to government mandates only four times – 4.6
percent.
Former CBS “Evening News” host
Dan Rather promised on the May 7, 2006, “60 Minutes”
ethanol would be “cheaper and cleaner” than regular
gasoline.
ABC’s “20/20” host Elizabeth
Vargas characterized ethanol as a good replacement for
traditional fuels as recently as April 11, 2008.
But as prices at the grocery
stores rose, the media
started connecting the dots between increased
ethanol use and higher food prices.
On April 8, 2008, NBC “Nightly
News” anchor Brian Williams reported on “something of a
crisis” in Haiti, where demonstrators protested “the
soaring cost of food in what is, after all, a very poor
nation, where a lot of people cannot afford food.”
Much of the coverage on
broadcast networks, however, has suggested that market
demand for ethanol led to the increase in corn costs
without noting that
demand was artificially driven by a government mandate
used to advance environmental goals.
“Because of the demand for
ethanol, the price of corn is up nearly 75 percent in
the last year,” reporter Scott Cohn said on the “NBC
Nightly News” March 31, 2007. “A windfall on the farm at
the local co-op where they sell seed and fertilizers.”
Cohn’s report suggested good
news for farmers was good news for the economy, but he
ignored the fact that the demand was artificial and the
possibility that higher food prices would strain
American families’ budgets or exacerbate world hunger
problems.
And some in the media still
haven’t caught on to the negative effects. The
June 12 CBS “Evening News” reported that high corn
prices were the result of floods in the Midwest,
although demand for corn for ethanol has been a more
powerful driving factor.
Two of the mentions of the
mandate for ethanol came from CNBC host Jim Cramer, a
critic of the policy because of its effect on food
prices. “The mandate has bid up everything,” Cramer said
on the April 25 NBC “Today” show. “You drop the mandate,
prices plummet.”
Propping Up the Market
Obama has acknowledged that
ethanol is not attractive to a free market – meaning it
wouldn’t survive in direct competition with conventional
fuels without being propped up.
“First, we can reduce the risk
of investing,” he said, promoting tax-funded loan
guarantees and venture capital to biofuel developers.
“Once we take the risk out of
investing, the second thing the government can do is to
let the private sector know that there will always be a
market for renewable fuels,” Obama said, proposing
increasing renewable fuel standards.
But the effects of mandated
ethanol are already clear: the increased demand for corn
to be used in ethanol has driven up its price. Higher
corn prices have led to higher prices for other foods
that use corn.
“When you dramatically
increase the demand for any product, you cause its price
to rise,” George Mason University economist Dr. Donald
Boudreaux told the Business & Media Institute. “This is
fundamental Economics 101, supply and demand.”
Boudreaux said ethanol
mandates and subsidies are more beneficial to farmers
than grocery shoppers or the environment.
“Farmers, especially corn
farmers, made out like bandits because now there’s this
artificial market enhancement for their product, and so
they’re receiving higher returns causing the price of
corn products to rise, the price of foods that are close
substitutes for corn to rise, and of course it’s causing
the price of gasoline – it’s one element in the rise of
the price of gasoline,” he said.
Cato Institute senior fellow
Dan Mitchell said ethanol mandates and subsidies rival
government sponsorship of the recently failed mortgage
giants Fannie Mae and Freddie Mac for the title of the
most damaging government program.
“It’s an interesting contest
in Washington: what is the mostly sleazy, corrupt and
inefficient form of subsidy,” he said. “Certainly a lot
of people would say Fannie and Freddie because of what
happened with the bailout and the housing bubble and all
the economic turmoil that resulted. But you could make a
pretty good case that something like ethanol is perhaps
even worse than Fannie and Freddie housing subsidies,
because ethanol not only causes turmoil in energy
markets, it also causes turmoil in food markets, and it
also apparently causes a lot of environmental problems
as well and it’s all being done solely because the
people who benefit are giving campaign contributions to
the politicians.”
Even environmentalists who
prefer alternative fuels are calling for existing
mandates to be repealed.
In an Earth Day column in The
Washington Post April 22, 2008, Earth Policy Institute
founder Lester Brown and Clean Air Task Force lawyer
Jonathan Lewis
blamed government-mandated ethanol for problems like
higher food prices in the U.S. and food crises in poorer
countries.
“[T]he evidence irrefutably
demonstrates that this policy is not delivering on
either goal,”
Brown and Lewis wrote. “In fact, it is causing
environmental harm and contributing to a growing global
food crisis.”
Time magazine
referred to ethanol as a “clean energy scam” in an
April 2007 article outlining the negative
environmental effects of increased corn production.
Reporter Michael Grunwald said increased production to
meet increased demand for corn is “dramatically
accelerating global warming” and threatening Brazilian
rain forests.
The United Nations’ “Special Rapporteur on the
Right to Food,” Swiss professor Jean Ziegler, called the
use of crops like corn for fuel a “crime
against humanity.”
McCain: Read
about the media’s failure to connect rising costs to
ethanol mandates.
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