Why Biofuels are not Economically Beneficial

Biofuels and its Disadvantages
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March 31, 2023
In recent decades, there has been a growing interest in biofuels as a potential solution to reduce our dependence on fossil fuels and mitigate climate change. One type of biofuel that has received significant attention is corn-based ethanol. Produced by fermenting corn starch, ethanol is blended with gasoline and used as a transportation fuel. However, despite the government subsidies and tax incentives for corn-based ethanol production, there are serious concerns about its economic viability. Accordingly, the author of this paper argues that biofuels, particularly corn-based ethanol, are not economically beneficial due to their negative impact on gas prices and the environment. Particularly, he believes that Ethanol's lower energy content compared to gasoline leads to reduced fuel efficiency and ultimately, increased fuel costs for consumers. Additionally, the production of corn-based ethanol has significant environmental consequences, including land-use changes, water pollution, and deforestation, which also leads to significant direct and indirect economic impact on the part of the State. Therefore, it is crucial to examine alternative, more sustainable sources of energy production that do not sacrifice economic viability and environmental sustainability.
The Harm caused by Biofuels
Cost of Production
Government Subsidies and Tax Incentives
One of the disadvantages of Biofuels (particularly ethanol) is the direct and indirect costs associated with its production. Particularly, the government provides subsidies and tax incentives to promote the production of corn-based ethanol. These policies were intended to reduce dependence on foreign oil, improve energy security, and mitigate climate change (US Department of Energy, 2021). However, these subsidies and tax incentives have led to an oversupply of corn, which has driven down the price of corn and negatively impacted the income of farmers who do not receive these subsidies. Moreover, these subsidies and incentives have not significantly reduced dependence on foreign oil or mitigated climate change, making them an inefficient use of taxpayer money.
Energy Required
Corn-based ethanol production requires a significant amount of energy, including energy to grow and harvest the corn, transport it to the ethanol plant, and convert it into ethanol. The energy required to produce ethanol is often greater than the energy obtained from the final product (US Energy Information Administration, 2022). Additionally, the use of fossil fuels to power the ethanol production process further increases the environmental impact of corn-based ethanol.
Opportunity Cost
The use of corn for biofuel production reduces the amount of corn available for food production, which can drive up food prices and contribute to food insecurity. This opportunity cost should be taken into account when evaluating the economic benefits of corn-based ethanol.
Impact on Gas Prices
Ethanol’s Lower Energy Content
Ethanol has a lower energy content than gasoline, which leads to reduced fuel efficiency and increased fuel consumption. As a result, consumers may need to purchase more fuel to travel the same distance, ultimately increasing the cost of driving.
Blending and Mixing
The blending of ethanol with gasoline is required by law, and this increases the cost of gasoline. Ethanol has a lower energy content than gasoline, and blending ethanol with gasoline can decrease the overall energy content of the fuel, resulting in reduced fuel efficiency and increased fuel consumption.
Consumer Costs