In Austin, it’s Keep Austin Weird. What’s fitting for Houston?
Well, you gotta go with your strengths—and Houston does have 24 Fortune 500 companies headquartered across its sprawling central business districts.
It could be worse—look at sayings from other Texas cities.
Ouch! But not undeserved, Dallas.
Sorry, SA.
America’s fixation with corn-based ethanol, as it turns out, isn’t producing fuel that’s much greener or cheaper than regular old petroleum-based gasoline. True, ethanol from Iowa means we’re not sending money to Saudi Arabia, but it uses almost as much energy to produce ethanol as it delivers to end users—so there’s no real energy benefit.
It also uses substantial amounts of limited water resources. A typical ethanol factory producing 50 million gallons of biofuels guzzles over 26 million gallons of water—putting a heavy burden on aquifers in corn-growing areas.
Why is it economically viable? Because of heavy subsidies from state and federal governments, mandates by states for ethanol to be blended into gasoline, and high tariffs (like a 100 percent levy on Brazilian sugar-based ethanol) that keeps out foreign ethanol imports. With federal subsidies of 51 cents per gallon and many states mandating the E85 fuel blend (that contains 85 percent corn ethanol), biofuels are artificially buoyed in the marketplace by government policies.
So this market distortion has shifted corn from food to fuel. The number of ethanol factories has almost tripled from 50 to about 140 since 2000, with 60 or so more under construction. Last year President Bush signed a bill increasing mandated biofuel production 500 percent, to 36 billion gallons, by 2022.
As more land is used to grow corn for fuel instead food, prices rise. It also pushes up the price for soy, wheat, and rice. Rice prices rose 16 percent in 2007, and wheat increased 77 percent. Very sharp rises historically, but nothing compared to this year. Since January, rice rocketed 141 percent, and one variety of wheat shot up 25 percent in a single day.
And since corn is used as animal feed, the price of meat, milk, and cheese is also rising. And that’s just here in America.
Across the world there are riots over soaring food costs. It’s driven by biofuels, but also growing demand from emerging markets, droughts, high oil prices, increasingly expensive agricultural chemicals, and the weak dollar. This conflagration of events threatens to push million into poverty and starvation.
Who’s benefiting from this? Big agribusiness like ADM produce around 70 percent of corn in America, and higher prices mean higher profits. And how do they keep the ethanol business safe? Lobbying, of course. And, if you’re a West Wing fan, you’ll remember the political problem ethanol causes for candidates who try to balance the truth with the need to win votes.
Energy Secretary Samuel Bodman said at a conference in Alexandria, Va. that we need to start “moving away gradually” from ethanol made from food such as corn. “As we pursue diversity in our overall energy mix, we must also pursue diversity in our biofuels,” Mr. Bodman continued, “this means moving away gradually from ethanol produced from foodstocks like corn.”
Joseph Romm, a senior fellow at the Center for American Progress, agrees we need to move away from corn-based fuel. He says “we’ve gone too far on corn ethanol. I think we now can see the real impact it’s having on food in the marketplace–around the world and at home. And I think we need to rethink the corn ethanol policy, absolutely.”
“I think the pursuit of the mandate for corn ethanol, especially in the 2007 energy bill, does more harm than good. I think mandating cellulosic ethanol that doesn’t use a lot of energy, doesn’t interfere with food production and doesn’t cause a lot of greenhouse emissions, I think that makes sense.”
Sugar is a different story. It provides 45 percent of Brazil’s fuel on only 1 percent of its arable land. Marcos Jank, the head of their trade group, explains “grain is good for bread, not for cars. But sugar is different.” In America, however, domestic politics has led to a 100 percent tariff on Brazilian ethanol.
But there’s something even better: cellulosic ethanol. It’s a biofuel made without food crops, using inedible plants not grown on premium farmland. It’s called switchgrass–yes, the switchgrass President Bush made famous in a State of the Union Address. Switchgrass grows across the prairies and doesn’t take the place of food crops.
The U.S. Department of Agriculture and the University of Nebraska-Lincoln performed a long-term, large-scale field switchgrass study. Farmers in 10 fields of 15 to 20 acres each in Nebraska and North and South Dakota grew switchgrass over five years, and kept track of how much fuel and fertilizer they used during the trials. Vogel and his colleagues showed that switchgrass yielded 540% more energy as a biofuel than the amount of energy used to grow, harvest and process it.
So swichgrass is the cold fusion of ethanol. It will take a while longer to come into the mainstream, but it promises low carbon emissions, high energy returns, a replacement for foreign oil, and doesn’t take food out of anyone’s mouth. Here’s a crazy thought: maybe the money used to subsidize ethanol would be better spent developing cellulosic ethanol?
The fallout that started with sub-prime home loans spread to both Wall Street and Main Street. It ultimately caused the federal government to pass a $700 billion bailout bill to avert another Great Depression. How did we get here?
There are many factors, but the overarching reason is that Americans have a fixation on home ownership. Owning a home is part of the “American Dream.” People rationalize it by thinking about the tax breaks and the fact they have equity. And all this was buoyed by an irrational faith that housing prices will always go up.
“A home is a great investment,” we’re told by real estate agents, loan agents, and other homeowners. But let’s think about the key word “investment.” No intelligent person would plunk down an equivalently huge percentage of their net worth on a stock without pouring over the financials and analyzing risk. But people don’t think about their home the same way. Homes are different—they’re safe as, well, houses.
But buying a house is an investment—the biggest one most people will make in their lifetime. Just as overleveraged speculators bought overpriced stock in the 1920’s bubble market, overleveraged homebuyers paid more than they could afford for overpriced houses in a bubble market. Adam Smith would say they deserved to lose their investment because they made a bad decision. But when we’re talking about someone’s home, it’s just not that simple.
People made bad decisions, but they were also given bad advice from an institutionalized fixation on home ownership. The “Ownership Society” is how President Bush described it. “We’re creating…an ownership society in this country,” said Bush in October 2004, “where more Americans than ever will be able to open up their door where they live and say, welcome to my house, welcome to my piece of property.”
But while America has had a political, financial, and cultural drive toward home ownership, Europe has largely stayed a population of renters. Indeed, many Germans, French, and Dutch see private home ownership as aristocratic. One big difference between the U.S. and Europe is how FDR and his New Deal tackled the issue of housing. While Europe decided to build “council houses,” basically public housing, FDR created Fannie Mae to lower the cost of home mortgages.
This fundamentally different approach demonstrates how Roosevelt can be seen as a fervent capitalist when viewed from the other side of the Atlantic, but as a socialist by American conservatives. It also reveals how the seeds of American ownership-entitlement were sown so long ago that most people don’t remember any alternative.
Renting an apartment doesn’t make you less of a person. Not driving a SUV doesn’t make you weak. Taking mass transit doesn’t mean you’re a loser. Among the many paradigms Americans need to shift is that a house in the suburbs, 30, 40, or 50 miles outside the city, is not sustainable. What we call the American Dream needs to be reevaluated.
