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Will a drought affect the price of ethanol?

The Effort to Encourage Ethanol
An oil well stands in the middle of an Illinois corn field. The state is now one of the country's leading ethanol producers.
An oil well stands in the middle of an Illinois corn field. The state is now one of the country's leading ethanol producers.
Scott Olson/Getty Images


­Ethanol production will grow in coming years for many reasons. Why? Because the law demands it.

The Energy Independence and Security Act of 2007 (EISA) sets mandates for making and using ethanol. The act also includes targets for solar, wind and coal energy production. Its goal is to reduce the amount of energy resources that the United States must import to meet its needs.

However, the attention to ethanol has also raised the ire of environmentalists and some leaders of international organizations who say ethanol production demand for corn is contributing to global hunger. New York Times columnist Paul Krugman has literally demonized ethanol, taking aim in a column that blamed ethanol production for food riots taking place around the world.

"Where the effects of bad policy are clearest, however, is in the rise of demon ethanol and other biofuels," Krugman wrote. He added, "Land used to grow biofuel feedstock is land not available to grow food, so subsidies to biofuel are a major factor in the food crisis. You might put it this way: People are starving in Africa so that American politicians can court votes in farm states" [source: Krugman].

More leading economists have come out against increased ethanol production. Economist Jeffrey D. Sachs railed against "the misguided policy in the U.S. and Europe of subsidizing the diversion of food crops to produce biofuels like corn-based ethanol" [source: Sachs]. Jean Ziegler, the U.N. Special Rapporteur for the Right to Food, went so far as to label biofuel production "a crime against humanity," for its role in raising global food prices [source: Cendrowicz].

Supporters of ethanol say such talk ignores the complex variables that determine food prices, of which cost of the actual grain (corn is a grain) is but a small portion. The National Corn Growers Association (NCGA) contends that there is plenty of food to feed the world. The problem is getting the food to where it's needed despite inadequate infrastructure or political unrest in nations where people are hungriest [source: National Corn Growers Association].

Corn happens to be the crop of choice in the United States when it comes to making ethanol, but it's not the only source that fuel producers can use. In fact, many agricultural products regarded as waste can be used for ethanol stock. Find out what they are on the next page.