The effects of the ill-conceived federal mandates for ethanol are now being felt more than ever in the homes of the average American. While these mandates have impacted the price of gasoline for the last several years (as ethanol has been far more expensive to produce than gasoline), the conversion of farmland from producing food to producing fuel is now hitting consumers harder than ever. According to the Department of Labor Statistics, food costs are now rising faster than any time in the last 17 years. The corn and soybeans that are primary feedstocks of ethanol production have displaced wheat production and driven up the costs for chicken and cattle feed. Combined this cost with the effect of higher crude prices driving more interest toward, and speculation in, ethanol and biodiesel, corn and soybeans have doubled in price in the last two years and wheat is now trading at over $11/bushel, up from less than $4.50/bushel just last year. The downstream impact of these wholesale prices increases are that we, as consumers, are paying almost 20% more for bread, 50% more for eggs and 25% more for milk compared to two years ago. As food costs take up about 15% of the average families’ budget, compared to about 5% for gasoline, the exposure to increased food costs is much greater and the effects of ethanol mandates are being magnified for the average family.

The impacts of ethanol mandates are a shining example of why the government should not attempt to short circuit the markets. Mandating the use of any commodity will always drive capital to that market at the expense of more efficient commodities creating imbalances that will ripple throughout the economy and, in this case, heavily impact every consumer in the country.

You could say the decision to force the use of ethanol is a noble cause - reduce dependence on foreign oil. I agree - we absolutely have to reduce our dependence on sources of energy that we do not control. Increased use of solar, wind, hydro, geothermal, and in particular nuclear, can do that in the long-term. In the near term, we need to encourage the exploration and production of domestic sources, including drilling off the east coast and in Alaska. We have got to get away from being in the position where our economy, and potentially the very future of our country, can be destroyed by the whims of unreliable foreign governments.

But first, we have got to stop allowing politicians, who are being informed by special interest groups, to meddle in the free market, creating inefficiencies that have very large and very serious impacts on our economy.

There are no easy answers and nothing is costless - every alternative source of energy has a downside. However, if we reduce regulatory barriers and encourage the marketplace to find the safest and most efficient solution or combination of solutions, there is no doubt the outcome(s) will be the most economically viable and in the best interest of all of us.

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