RUSSELL HARDING, in an Op-Ed published in yesterday’s NYTimes, explains the growing disaster behind growing corn for ethanol:
(…) Ethanol prices trend higher and lower along with the price of gasoline, yet the cost of producing ethanol tends to rise with demand, since higher ethanol production exerts upward pressure on the price of corn. In a free market, corn prices might be expected to eventually fall as the market adjusts to increased demand. But because the government heavily promotes ethanol use through subsidies and regulation, the market is continually strained.
The problem is magnified because corn is a water- and fertilizer-intensive crop that requires considerable investment. Worse, since fertilizer is often an oil-based product, the cost of growing corn tends to rise at the very moment ethanol prices, which rise with oil prices, might bring a good return.
Read the complete text here.