There may well be hunger among the world’s poorest this year, but not because of the U.S. corn ethanol program. Rather, the threat comes from high oil prices, which at $100 per barrel will place a tax on the U.S. economy of $800 billion per year, and $3,200 billion on the world economy as a whole. This will raise the price of all goods and slow down the world economy, thereby throwing millions of people out of work and leaving them without income to buy food. According to a Merrill Lynch analysis, if not for the world’s ethanol programs (of which U.S. production represents about a third), global oil prices would be 15 percent higher than they are, thereby placing an additional $480 billion impost on the world economy.
The problem is not that we are producing too much alcohol to compete against oil, but that we are not producing enough.