"Energy Independence": It'll Cost You at the Grocery Store

Energy will cost us more and more, and not just at the gas station or on our utility bills. Even our homegrown, arguably better for the environment ethanol will ultimately not save us money. The June 13 Christian Science Monitor reports that grocery costs have risen as much in the first half of this year as they did in all of 2006 [Patrik Jonsson and Bina Venkataraman, "From Milk to Meat, US Food Prices Spike Upward"]. The US Labor Department sees food prices rising 7.5% this year, almost triple the expected 2.6% core inflation rate. (The core inflation rate excludes food and energy, which strikes me as a statistic only an ivory-tower economist could love: "Sure, we'll calculate how much prices are rising, but we'll ignore two seectors of the economy that are essential to our existence.")

That cost increase is not coming simply from higher energy costs in food processing and transport.

The chief culprit is corn, namely No. 2 feed corn, the staple of the breadbasket. In answer to President Bush's call for greater oil independence, the amount of feed corn distilled into ethanol is expected to double in the next five to six years. Distillation is already sucking up 18 percent of the total crop. The ethanol gambit, in turn, is sending corn prices to historic levels – topping $4 per bushel earlier this year, and remaining high. All of this trickles down to the boards at the Chicago Mercantile Exchange, affecting the price of everything from sirloin to eggs (which are up, by the way, 18.6 percent across the nation).

Now I can't begrudge farmers their good corn prices -- they've got make a living, and ethanol is helping them do that. And as the South Dakota Corn Growers point out, ethanol production adds over a billion dollars to South Dakota's economy (and that was back in 2004).

However, this CSM article puts the lie to propaganda from big-industry interests like the National Corn Growers Association that tries to tell us that ethanol production doesn't really impact food prices. Ethanol is not manna from heaven. It's not free energy. We are taking viable food material -- whether for humans or for livestock -- and turning into fuel for our machines. The trade-off brings unavoidable costs. We can make that trade-off -- increased energy independence might be worh it -- but we should do so with all of the costs in full view.