Ethanol’s Role in Higher Gasoline Prices – Not News
Networks seem to be waking up to pricing effects, though free-market critics of the alternative fuel have issued this warning for years.

By Ken Shepherd
Business & Media Institute
April 21, 2006

     Corn-based ethanol isn’t all it’s cracked up to be, the media are finding out now. But for years, conservative critics have criticized ethanol as an energy alternative panacea.

     With gas prices nearing $3 a gallon and oil topping $70 a barrel, network newscasts in the past week have looked at how new federal requirements for ethanol additives in gasoline are actually adding to the price at the pump.

     On the April 11 “World News Tonight” and “Nightly News,” ABC’s Dean Reynolds and NBC’s Kevin Tibbles respectively reported that transport problems for ethanol combined with a low supply were driving up gasoline prices.

     CBS’s Wyatt Andrews issued a similar report a week later on the April 18 “Evening News” citing the Energy Department’s March warning that “because of transport problems, ethanol, which is already blended into a third of the gas supply, could actually raise gas prices this summer.”

     But while ethanol’s problems are news to the media, conservative critics of ethanol subsidies have pointed out the fuel additive’s deficiencies for years.

     On April 8, 2005, The Heritage Foundation’s Ben Lieberman warned that ethanol “sales have not grown quickly enough to satisfy the ethanol industry or its allies in Congress.” Lieberman warned that an ethanol mandate being debated in the Senate would “raise the cost of gasoline, running against the original purpose of the energy bill.”

     “[T]he only reason ethanol needs federal help” from taxpayer subsidies, Lieberman noted, “is that it is too expensive to compete on its own. Whether 5 billion, 6 billion, or 8 billion gallons, an ethanol mandate would mean significant cost increases for the driving public.”

     The American Enterprise’s Blake Dvorak similarly warned against ethanol as a solution for high gas prices in a Dec. 9, 2003, article, calculating the heavy cost of production and the energy wasted in developing the alternative fuel source.

     Using research by Cornell University scientist David Pimentel, Dvorak calculated that “To plant, grow, and harvest the corn takes about 140 gallons of fossil fuel and costs about $347 per acre,” while “even before the corn is converted to ethanol, the feedstock alone costs $0.69 per gallon of ethanol.”

     More importantly, Dvorak wrote that “about 29 percent more energy is required to produce a gallon of ethanol than is stored in that gallon in the first place.”