From today’s WSJ:
At what price will corn be so expensive that the federal government will decide that it is time to stop driving up the price of food?
Three years ago, Congress imposed a Renewable Fuel Standard (RFS) mandate that has forced the gasoline industry to mix massive amounts of corn-based ethanol into the nation’s fuel supply. In 2007, Congress nearly
doubled that mandate to require nine billion gallons of ethanol be blended into gas in 2008 and even more in 2009.
But, as a safety valve, Congress gave the Environmental Protection Agency (EPA) the power to waive the new mandates if they turn out to have unforeseen, negative consequences.
As we can see now, the diversion of our corn supply from grocery stores to gasoline pumps has caused the price of corn to spiral out of control. Corn prices were once driven by market forces. Today they are artificially driven up by a government mandate. In 2004, before the mandates were imposed, the cost of corn hovered around $2 per bushel. Now it is close to $8 per bushel.
The rest here.