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The Corn Isn't GreenThe real reason ethanol won't—and can't—cut American oil imports.

By Robert BrycePosted Wednesday, Nov. 12, 2008, at 6:55 AM ET

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Robert Bryce explained the Senate's misguided ethanol bill. Daniel Gross examined the backlash against corn fuel. William Saletan argued for turning food into fuel. Christopher Flavelle wondered if the next wave of biofuels could succeed when the first failed.

The surge in diesel demand is due in large part to the ongoing "dieselization" of the European automobile market, as well as continued economic growth in Asia and the United States. This increasing demand for diesel, combined with a global lack of refineries that can produce the type of low-sulfur diesel that is now mandated in the United States and Europe, means that diesel will continue selling for a premium relative to gasoline. And given a chronic shortage of high-quality refining capacity in Europe, that price differential will likely persist for a decade or more to come.

That increasing diesel demand (and the increasing value of diesel fuel) means that U.S. refineries are buying more foreign crude, not less. That's a bitter fact given that cutting dependence on foreign oil has been cited ad nauseam as the justification for the corn ethanol mandates as well as continued federal research funding for the mirage of cellulosic ethanol.

As an executive at a large domestic oil refiner (who asked that his name and company not be disclosed) explained it, "ethanol is making diesel more expensive relative to gasoline because it's expanding the pool of gasoline. But to make diesel, we have to process more crude, which in turn is raising the price of crude." He went on, saying that for some refiners, "gasoline is being thrown into the market as a diesel byproduct."

In other words, ethanol is doing absolutely nothing to reduce overall U.S. oil consumption or imports because refiners have to buy the same amount of crude (or more) in order to meet the demand for products other than gasoline—that is, jet fuel, diesel fuel, fuel oil, asphalt, etc.

The most recent oil import data back up this conclusion. Since 2000 domestic crude-oil production has declined by about 600,000 barrels per day. Meanwhile, domestic corn ethanol production capacity has surged about fivefold. In July, according to the Renewable Fuels Association, U.S. ethanol output stood, coincidentally, at about 600,000 barrels per day. Given those numbers, America's overall oil imports should be flat or only slightly higher, right? After all, corn ethanol boosters claim that their fuel will reduce America's need for foreign oil. But the latest numbers from the Energy Information Administration show no decrease in imports. In fact, it's just the opposite. In July 2000, the United States was importing about 11.6 million barrels of crude oil and petroleum products per day. By July 2008, total imports had increased to about 13 million barrels per day. The same trend holds true when looking only at crude oil imports. In July 2000, crude oil imports were about 9.4 million barrels per day. By July 2008, they had increased to 10.1 million barrels per day.

The punch line here is obvious: The corn ethanol scam cannot, has not, and will not significantly reduce overall oil use or significantly cut oil imports because it only replaces one segment of the crude-oil barrel. Furthermore, all the talk about "cellulosic ethanol," a substance that, in theory, can be profitably produced in commercial quantities from grass, wood chips, or other biomass, is largely misplaced because, like corn ethanol, it will only supplant gasoline.

Unless or until inventors can come up with a substance (or substances) that can replace all of the products that are refined from a barrel of crude oil—from gasoline to naphtha and diesel to asphalt—then the United States, along with every other country on the planet, is going to continue using oil as a primary energy source for decades to come. And that will be true no matter how much corn gets burned up in America's delusional quest for "energy independence."