Energy has long been one of inflation’s bogeymen. The oil price shocks of the 1970s and the failed economic policies instituted by Congress afterward have left a lasting impression on almost everyone old enough to remember those events.

Ever since then, any jump in energy prices has raised fears of inflation – or more likely, a recession resulting from the combination of increased energy costs and the restriction of the money supply that central bankers would use to stifle inflation.

But energy has lost a bit of its steam as a factor in the economy over the past few decades. The energy intensity of the economy (i.e., the amount of energy consumed to create a fixed amount of economic output) has declined by nearly half since 1970. Certainly since then, there has continued to be a well documented, if imperfect, correlation between high energy prices and recessions. But the overall trend has been energy prices’ decreasing influence on the overall economy.

That trend may just have reversed. Just as the high energy prices of the “stagflation” era inspired government to implement silly and illogical “solutions” ranging from confiscatory taxation to price controls, the current period of high energy prices has inspired government to an even stranger solution: to fix our energy problem, it proposes to burn up much of our food.

Agricultural biofuels, by any arithmetic, are incapable of replacing much of our current energy supply. Making these biofuels can, however, consume a significant share of our food supply, and this fact has recently led to substantial increases in the price of corn, as more of the supply is commandeered by subsidy for ethanol production. The country has planted the largest corn crop since World War II, and still prices have increased – not just for corn, but also for the other crops corn usually displaced. All grains, meats, milk, eggs, and a variety of corn-derived commodities, from high fructose corn syrup to cornstarch, have seen price increases because of the ethanol rush.

Energy prices and food prices have always been linked, due to the high energy needs of agriculture, but the recent headlong push for biofuels has magnified the effect. High energy prices are unlikely to be alleviated by biofuels, which are far more expensive in unsubsidized terms than the fuels they are intended to replace, and they are now being exacerbated by higher food prices.

The average American household spends nearly 10 percent of its disposable income on food, making it a major player in the overall inflation rate. The fraction spent on food is much higher in other countries – and the burning of America’s corn crop is sending price ripples around the world. Europe has experienced its largest food price increase in 15 years. China’s food prices have increased 18.2 percent this year, and inflation has risen to its highest level in 11 years. U.S. wheat stockpiles could fall to a 60-year low in 2008, according to forecasts.

An examination of consumer price index data shows that while core inflation (all items, less food and energy) has increased by about 2.25 percent over the past year, food costs have increased by nearly 5 percent. It’s an unusually large divergence between the two. It could be a coincidence, or it could be a taste of things to come – especially if proposed Congressional measures to vastly increase biofuels mandates become law.

Consumers have always had to pay for increased energy costs at the pump and the thermostat, but thanks to the current mania for biofuels they can also look forward to paying for them at the grocery store and the restaurant. Then, come April 15, they can pay for the subsidies that make biofuels cheap enough to compete with oil. And if inflationary pressures mount, they can pay for them yet again in the form of higher interest rates on credit cards and mortgages.

Voters are paying government to increase the price of food so they can feel better about paying so much for fuel – all while putting a brake on the economy. Lower fuel costs sure are expensive, and energy independence seems to involve a lot more dependency on government. It’s enough to drive one to drinking – except that the price of beer has increased so much lately.