Media Finally Getting It: Ethanol Mandates a Dumb Idea

They're starting to get it. The media are figuring out government meddling in U.S. energy policy is taking a toll on the American economy.

On February 20, the Labor Department reported that the Consumer Price Index (CPI), a key inflation reading, rose 0.4 percent in January, matching December's rise. Why? Increased food costs because corn is being used for ethanol.

"Farmers are replacing wheat fields with corn to meet the demand for alternative fuel, but that means higher flour prices - and in one Pennsylvania pizza shop, more expensive pies," NBC News correspondent Chris Jansing said on the February 27 "NBC Nightly News."

But the strongest correlation between the politics of alternative energy and the rise in inflation came from CNBC's Jim Cramer in a February 27 interview with Democratic presidential hopeful Sen. Hillary Clinton (D-N.Y.) on his show "Mad Money."

"Senator, you mentioned inflation," an animated Cramer said. "Half of inflation is coming from oil. The other half is coming from food. Do you believe that we should continue to burn food in this country? Poor people cannot afford what we're doing with our ethanol strategy. We're raising the price of the staples that they eat. If we scrapped ethanol, half of our inflation would go away. Why are we allowing the ethanol lobby to destroy the affordability of people who want to eat chicken and beef?"

Clinton, a self-proclaimed opponent of Washington special interests, provided more of a dodge than an explanation.

"Well, I think it's a little more complicated, Jim, because I think the increases in the energy prices generally have contributed to food inflation," Clinton said. "Although, you're absolutely right - that the rising cost of corn and soybeans, which are ubiquitous in our food supply, have certainly contributed significantly, but we're in a transition period."

Rather than propose emission-free nuclear energy, cleaner uses of coal (abundant in supply in the U.S.) or even drilling in uninhabited isolated so-called wilderness areas in Alaska - Clinton gave Cramer empty talk about "green collar" jobs and the use of the highly inefficient solar and wind power.

"We need an energy policy that does focus on homegrown energy, and that has to be a broad base set of energy alternatives," Clinton said. "You know, ethanol from corn is not the most efficient way of producing it, but it is what we are doing now as we move toward cellulosic, as we look at how we're going to incentivize wind and solar. You know, I think we should be looking more at new forms of energy for our cars."
Economy Environment 2008 Presidential Wages & Prices Biofuels Ethanol CNBC NBC Nightly News Mad Money Video Jim Cramer Chris Jansing

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