The great biofuel fraud

http://www.atimes.com/atimes/Global_Economy/IH01Dj01.html

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The great biofuel fraud
By F William Engdahl

That bowl of Kellogg's cornflakes on the breakfast table or the
portion of pasta or corn tortillas, cheese or meat on the dinner table
is going to rise in price over the coming months as sure as the sun
rises in the East. Welcome to the new world food-price shock,
conveniently timed to accompany the current world oil-price shock.

Curiously, it's ominously similar in many respects to the early 1970s
when prices for oil and food both exploded by several



hundred percent in a matter of months. That mid-1970s price explosion
led the late US president Richard Nixon to ask his old pal Arthur
Burns, then chairman of the Federal Reserve, to find a way to alter
the Consumer Price Index (CPI) inflation data to take attention away
from the rising prices.

The result then was the now-commonplace publication of the absurd
"core inflation" CPI numbers - sans oil and food.

The late American satirist Mark Twain once quipped, "Buy land: They've
stopped making it." Today we can say almost the same about corn, or
all grains worldwide. The world is in the early months of the greatest
sustained rise in prices for all major grains, including maize, wheat
and rice, that we have seen in three decades. Those three crops
constitute almost 90% of all grains cultivated in the world.

Washington's calculated, absurd plan
What's driving this extraordinary change? Here things get pretty
interesting. The administration of US President George W Bush is
making a major public relations push to convince the world it has
turned into a "better steward of the environment". The problem is that
many have fallen for the hype.

The center of Bush's program, announced in his January State of the
Union address, is called "20 in 10", cutting US gasoline use 20% by
2010. The official reason is to "reduce dependency on imported oil",
as well as cutting unwanted "greenhouse gas" emissions. That isn't the
case, but it makes good PR. Repeat it often enough and maybe most
people will believe it. Maybe they won't realize their taxpayer
subsidies to grow ethanol corn instead of feed corn are also driving
the price of their daily bread through the roof.

The heart of the plan is a huge, taxpayer-subsidized expansion of use
of bio-ethanol for transport fuel. The president's plan requires
production of 35 billion US gallons (about 133 billion liters) of
ethanol a year by 2017. Congress has already mandated with the Energy
Policy Act of 2005 that corn ethanol for fuel must rise from 4 billion
gallons in 2006 to 7.5 billion in 2012.

To make certain it will happen, farmers and big agribusiness giants
like ADM or David Rockefeller get generous taxpayer subsidies to grow
corn for fuel instead of food. Currently ethanol producers get a
subsidy in the US of 51 cents per gallon (13.5 cents per liter) of
ethanol paid to the blender, usually an oil company that blends it
with gasoline for sale.

As a result of the beautiful US government subsidies to produce bio-
ethanol fuels and the new legislative mandate, the US refinery
industry is investing big-time in building new special ethanol
distilleries, similar to oil refineries, except they produce ethanol
fuel. The number currently under construction exceeds the total number
of oil refineries built in the US over the past 25 years. When they
are finished in the next two to three years, the demand for corn and
other grain to make ethanol for car fuel will double from present
levels.

And not just US bio-ethanol. In March, Bush met with Brazilian
President Luiz Inacio Lula da Silva to sign a bilateral "Ethanol Pact"
to cooperate in research and development of "next generation" biofuel
technologies such as cellulosic ethanol from wood, and joint
cooperation in "stimulating" expansion of biofuel use in developing
countries, especially in Central America, and creating a biofuel
cartel along the lines of the Organization of Petroleum Exporting
Countries (OPEC) with rules that allow formation of a Western
Hemisphere ethanol market.

In short, the use of farmland worldwide for bio-ethanol and other
biofuels - burning the food product rather than using it for human or
animal food - is being treated in Washington, Brazil and other major
centers, including the European Union, as a major new growth
industry.

Phony green arguments ... (cont)

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