Ethanol on food prices, gas emissions

On April 8, the Congressional Budget Office (CBO) released a report on the impact of ethanol on greenhouse gas emissions, food prices, and federal nutrition programs. Last year, U.S. consumption of ethanol reached a record high of more than 9 billion gallons. Increased use of ethanol is mandated in the Energy Independence and Security Act of 2007 (EISA), P.L. 110-140 (pdf, 311pp). One-quarter of all U.S. corn now goes to produce ethanol.

The demand for corn for ethanol production has exerted upward pressure on corn prices and on food prices in general. CBO estimates that the increased use of ethanol accounted for about 10 percent to 15 percent of the rise in food prices between April 2007 and April 2008.

In turn, increases in food prices will boost federal spending for mandatory nutrition programs such as the Supplemental Nutrition Assistance Program (SNAP, formerly known as Food Stamps) and the school lunch program by an estimated $600 million to $900 million in fiscal year 2009.

The Impact of Ethanol Use on Food Prices and Greenhouse-Gas Emissions
      Report (pdf, 26pp/2.5MB), April 2009
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