It was supposed to be the fuel that could wean, at least partially, the United States and other petroleum importing countries from their dependence on foreign oil.

Corn-based ethanol was heralded to do the trick and with massive political support from both sides of the political spectrum, it has emerged as the biofuel of choice, anointed by the United States government and enjoying the support of agricultural lobbies and states.

Ethanol, added to motor vehicle gasoline, is a great oxygenate and can stretch gasoline supplies blended from 10 to 85 percent, by volume. (Note that 1.5 gallons of ethanol are needed to replace one gallon of gasoline on an equivalent energy basis.) The ability of ethanol to stretch the gasoline stocks is the reason it was supposed to provide a measure of energy independence from imported oil. In addition, it is “renewable” and it evokes credits in net CO2 emissions because of the photosynthesis during the growing of corn. In theory these are all positive things; in reality the situation is quite unattractive if not outright catastrophic.

First, the net energy ratio of corn-based ethanol (useful energy divided by the energy required to produce a unit of ethanol) is at best 1.25 but in practice a lot worse. Some have calculated a ratio less than one, meaning that it takes more energy to produce ethanol from corn than the energy content of the fuel.

Because of very large government subsidies (see more below) the growth in corn-based ethanol has been nothing short of meteoric. From 2000 to 2010, ethanol production in the United States from the fermentation of corn, increased from 1.6 to 13.2 billion gallons per year. In 2011 this is expected to grow to almost 14 billion gallons. Congressional mandates have decreed that by 2022, biofuels blended into the US gasoline pool will increase to 35 billion gallons per year.

Thanks to considerable improvements in productivity for corn and other crops, US planted land has decreased by 39 million acres since 1980 from about 356 to 317 million acres, an 11% decrease. Corn’s share increased from 23.6% to 27.8% (88 million acres) displacing 13.4 million acres of other crops (about 5.9% of the other crop total). Most of this crop displacement by corn (5.2% out of 5.9%) has occurred since 2003. Without the dramatic improvement in corn productivity from 91 bushels per acre in 1980 to almost 165 bushels per acre in 2009, the displacement of other crops by corn would have been much more extensive.

Which crops are being displaced by corn? Food crops, animal feed crops, as well as cotton are all have experienced decreases. Since 2003, corn acreage increased 12.2%. Over the same time period:

• Wheat acreage decreased 13.7%
• Sorghum acreage decreased 42.6%
• Hay acreage decreased 5.5%
• Cotton acreage decreased 18.6%
• Barley acreage decreased 46.3%
• Oats acreage decreased 31.7%

The farmers are just responding to the economics of corn. High gasoline prices drive ethanol prices up and high ethanol prices drive corn prices up. With corn prices averaging $5.40 per bushel in 2010, farmers could bring in gross revenue of $756 per acre for every acre of corn they planted.

When cattle feed lots, poultry producers, and hog producers have to pay $5.40 per bushel for corn, is it surprising that food prices are increasing? The decrease in sorghum, hay, and oats acreage only makes the situation worse. With cotton acreage decreasing by 18.6%, why was it surprising that cotton prices went up 86% over the past 12 months?

The bottom line is the food versus fuel issue is very real and it will only get worse. To meet the 2022 mandate of 35 billion gallons of biofuels, if corn will be marshaled to fulfill the mandate (cellulosic ethanol does not seem to be doing any discernible progress) crop land dedicated to corn will have to increase from 88 million acres to 233 million acres, an increase of 145 million acres. That would increase the total crop land in the U.S. to 461 million acres, which is highly unrealistic because the most crop land that has ever been planted in the U.S. is 375 million acres (in 1932). If one assumes that crop land doesn’t increase above the 375 million acres, corn would have to displace 86 million acres or 37.6% of all other crops. This is above and beyond the crops that have already been displaced. Clearly corn-based ethanol is not a sustainable solution for the US energy needs.

The rest of the story is even more unsavory. US taxpayers are subsidizing corn-based ethanol and as a direct consequence food and clothing prices go up.

In 2000, fuel ethanol used 5.9% of the U.S. corn crop and corn was priced at $1.85/bushel. In 2010, fuel ethanol used 38.4% of the U.S. corn crop and corn was priced at $5.40/bushel. In late April of this year, corn futures were over $7.60/bushel.

The total crop used for corn-based ethanol in 2010 was about 4.77 billion bushels and 13.2 billion gallons of ethanol were produced. This means 2.77 gallons of ethanol are produced from each bushel of corn. This is a widely accepted number in the industry. At the current corn price of around $7.00 per bushel, just the corn feedstock cost for corn-based ethanol should be about $2.53 per gallon. On an equivalent energy basis, the cost of the corn feedstock for corn-based ethanol is $3.80 per gallon of gasoline. This doesn’t include the cost of production of the ethanol, the cost of transportation, or any other cost besides the corn. When the other costs are added in, corn based ethanol is a money losing proposition.

But it does not end there. Robert Bryce wrote on April 29, 2011 in the Energy Tribune.:

“Last year, the Congressional Budget Office reported that the cost to taxpayers of using corn ethanol to reduce gasoline consumption by one gallon is $1.78. This year, the corn ethanol sector will produce about 13.8 billion gallons of ethanol, the energy equivalent of about 9.1 billion gallons of gasoline. Using the CBO’s numbers, the total cost to taxpayers this year for the ethanol boondoggle will be about $16.2 billion.”

Summing up the incremental impact on food prices and the direct government subsidies, the use of corn based ethanol costs the country perhaps an incremental amount of nearly $4 per gallon, doubling the cost per gallon in the portion that is ethanol compared to petroleum based gasoline.

Corn-based ethanol has evolved into the least attractive of all energy ideas of the day.