This is a mess even before you consider the foibles of the source of the lion’s share of this ethanol: corn. Before the Renewable Fuel Standard set these arbitrarily high targets, the US used just 23 percent of its corn to produce ethanol. Last year 43 percent of our corn crops went towards producing the biofuel. That shift has driven up global prices for corn, starving the world’s poor and potentially fueling food riots. And to what end? Corn ethanol is categorized as a biofuel, but it doesn’t reduce emissions. Advanced biofuels produced from such sources as sugarcane and algae pass the green test, but they haven’t yet proven their commercial viability.
which is followed by a comment including this:
...In turn, this has driven the prices of ‘corn ground’ profoundly
higher, such that there are now hundreds of thousands of acres in the
midwestern corn belt and elsewhere with prices (as much as $12,000/acre)
which are completely unsustainable if the mandate was eliminated or
substantially rolled back. It would result in a farm-belt crisis akin
to what happened in the early 1980′s when tens of thousands of farmers
went bankrupt when land prices collapsed.
A ‘partner in crime’ in this fiasco is Bernanke, whose zero interest
rate policy has allowed farmers, bankers and speculators to pay
exhorbitant prices for farm ground that is used strictly for producing
corn for ethanol and servicing of the enormous debt associated with much
of this acreage depends totally on continuation of the ethanol mandate.
This mostly hidden debt bomb probably explains why the mandate not
only continues, but is possibly going to get even more onerous. There
are just too many money men who have too much to lose if anything
Translation: "Hey, all that money from the corn producers has a price; and you peasants are going to pay it for us."