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Lisa Napoli: Today in Ghana, the U.N. Secretary General talked about the effect biofuels are having on food prices around the world and how they could set back world anti-poverty efforts. Fortune magazine's Allan Sloan says lots of people once thought biofuels were going to save the planet.
Allan Sloan: I think of it as that movie "I Am Legend," where it starts out with a vaccine to cure cancer, then at the end wipes out most of the planet and turns almost everyone who's left into a flesh-eating zombie. Not quite what they bargained for. And the thing with ethanol and biofuel is that was supposed to be a way to cure the United States', what President Bush called our addiction to oil without anyone having to sacrifice anything. You know you're not raising taxes; you're not driving smaller cars; you're not being more efficient. And, of course, it turns out it's taking so much of the world's crops that it's run up the cost of food all over the world and has not succeeded in any visible way, at least in the United States, at holding down the price of oil.
Napoli: So, it's kind like taking a pill for a diet or using a machine that's supposedly going to tone you without your having to work. What would have been a better alternative?
Sloan: Well in hindsight, what my children would call a big honking gas tax where you would have put a fairly substantial tax on gasoline and then, because a lot of people really can't afford that, you flow it back to them in the form of an income tax credit. And that way we'd be paying the tax to ourselves instead of paying what is now the largest transfer of wealth from one society to another. And many of the oil producers are not exactly friends of the United States. So, we're helping fund the worldwide campaign against us, and I think we would have been a lot better off with a gas tax.
Napoli: What do we do now that we've become more dependent on this ethanol? How do we turn back and change directions again? Is it possible even?
Sloan: It's definitely possible. Is it going to happen? It probably wouldn't happen. The idea of ethanol is not a bad idea if you made it out of garbage, something that's already there that you don't have to grow. The idea of growing things to make them into ethanol, it didn't seem to make any sense when I heard about it, except it made political sense. And again, it's not only President Bush, it's also the Democrats, because you didn't see them lining up and saying, "You know, we'd rather have a gas tax."
That's Fortune magazine's Allan Sloan. And in Los Angeles, I'm Lisa Napoli. Enjoy the day