In the fuzzy “science” of economics, one law stands out like a light-house in the fog – the law of supply and demand.
That law tells us that when the demand for any commodity is increased by subsidies or tax breaks, or by mandating its use, its price will settle higher than it would otherwise have been.
When ethanol is subsidised or mandated, its production will become more profitable, more ethanol will be produced, and demand for the ingredients of its manufacture will increase. Thus more cereals, sugar, molasses, soy-beans and palm-oil will be diverted from producing food to producing ethanol. Consequently, their prices will also rise and less of them will be left for stock feed and human consumption. As a result of these higher prices for ethanol ingredients, more marginal land will be assigned to ethanol crops, and the cost of producing them will be higher.
Using more diesel to fuel more tractors and trucks to produce more crops, and then using government coercion to divert those crops into production of an inferior fuel for cars, makes no sense outside of Parliament.
Burning food for fuel is bad for the economy and the environment, does nothing for the climate, and harms human welfare.
Causing starvation for some humans so that others can feel green and virtuous is an evil exchange.
Viv Forbes
Viv Forbes, Chairman, The Carbon Sense Coalition, has spent his life working in exploration, mining, farming, infrastructure, financial analysis and political commentary. He has worked for government departments, private companies and now works as a private contractor and farmer.
Viv has also been a guest writer for the Asian Wall Street Journal, Business Queensland and mining newspapers. He was awarded the “Australian Adam Smith Award for Services to the Free Society” in 1988, and has written widely on political, technical and economic subjects.
