Biofuel Debate Rages On
Solutions lie in reduced consumption, not government intervention.
Record fuel prices and soaring food costs have intensified the debate over the role of biofuels in U.S. energy policy.
One camp claims dedicating farmland to fuel snatches food from the mouths of the world's hungry in favor of American gas tanks. Ethanol, they argue, is little more than a political mechanism for lining the pockets of farmers and special interest groups with taxpayer money. Its production uses more energy than it saves and only marginally reduces our dependence on foreign oil.
In opposition are those that believe biofuels are just one of many factors contributing to the inflation of food prices. High energy costs and booming demand from China and India are the chief culprits, they argue, because oil touches every aspect of food production and plays a much greater role in determining retail food prices.
Certainly stock investors in companies related even tangentially to biofuels - Archers Daniel Midland (ADM), Bunge (BG) and Corn Products International (CPO) to name a few - are increasingly concerned about the outcome of this growing debate.
Absent from the debate, however, is discussion of why we're in this predicament to begin with.
Let's start with the premise that the so-called mortgage meltdown is a symptom, not the cause of, our current financial crisis. Bad mortgages are indicative of an economy too dependent on credit and lacking enough real cash flow to support the debt service.
Reliance on foreign oil, often imported from unstable foreign states, is a symptom of an economy whose wants and needs outpace its ability to produce. True energy independence is only possible if our economy demands less of it.
Taking the analogy a step further, the solution to the credit crisis isn't more regulation or government intervention. Market-driven deleveraging has begun and must continue. It will be a painful -- but necessary -- process for those accustomed to living beyond their means.
Likewise, more subsidies and government programs are not the answer to our energy woes. The deflation of asset prices and a reining in of consumption of material goods is the only long-term solution to our dependence on foreign oil. This is the path to sustainable consumption, one that will eventually bring our propensity to consume back in line with our means to produce.
This readjustment is inevitable. Behind the scenes, beneath the headlines, a much broader and slow-moving migration toward the belief that less is, in fact, more has begun. This concept should be paramount in our pursuit of energy independence. Ironically, the credit crunch has put us well on our way.
The information on this website solely reflects the analysis of or opin=
=3D =3D3D ion about the performance of securities and financial markets by =
the wr=3D iter=3D3D s whose articles appear on the site. The views expresse=
d by the wri=3D ters are=3D3D not necessarily the views of Minyanville Medi=
a, Inc. or members=3D of its man=3D3D agement. Nothing contained on the web=
site is intended to con=3D stitute a recom=3D3D mendation or advice address=
ed to an individual investor =3D or category of inve=3D3D stors to purchase=
, sell or hold any security, or to =3D take any action with re=3D3D spect t=
o the prospective movement of the securit=3D ies markets or to solicit t=3D=
3D he purchase or sale of any security. Any inv=3D estment decisions must b=
e made =3D3D by the reader either individually or in =3D consultation with =
his or her invest=3D3D ment professional. Minyanville write=3D rs and staff=
may trade or hold position=3D3D s in securities that are discuss=3D ed in =
articles appearing on the website. Wr=3D3D iters of articles are requir=3D =
ed to disclose whether they have a position in =3D3D any stock or fund disc=
us=3D sed in an article, but are not permitted to disclos=3D3D e the size o=
r direct=3D ion of the position. Nothing on this website is intende=3D3D d =
to solicit bus=3D iness of any kind for a writer's business or fund. Mi=
ny=3D3D anville mana=3D gement and staff as well as contributing writers wi=
ll not respo=3D3D nd to em=3D ails or other communications requesting inves=
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter