What tortillas tell about energy policy

The tortilla, staple of Mexican cuisine, has become the nexus of a far-reaching trade and energy dispute.

A surge in U.S. ethanol production has led to a near-doubling of corn prices, so Mexican President Felipe Calderon recently put caps in place on the skyrocketing price of corn tortillas. This is economic nonsense, but it’s not the only economic nonsense involved.

U.S. programs subsidizing ethanol production from corn are money down a rathole.
In his State of the Union address Jan. 23, President Bush recommended a reduction in U.S. gasoline usage by 20 percent over the next 10 years and called for a large increase in ethanol production to make up the difference. However, producing corn from ethanol — the favored U.S. approach — is an ecological and economic disaster.

A gallon of corn-based ethanol provides only 1.3 times the energy required to produce it. This compares with sugarcane-based ethanol, which provides about eight times the energy required to produce it, soybeans at three times, or switchgrass at four times. The subsidies required to embark upon mass corn-based ethanol production only compound the problem.

Because the U.S. climate is not conducive to mass production of sugar-based ethanol, it should allow imports from places where efficient production is possible.

A BrekaningViews/WSJ commentary at Kansas City Star