Battling Ethanol-Propelled Food Prices

Scaling up technology for making ethanol from nonfood sources, such as grass and wood chips, could also help. Federal grants are already starting to make that happen, and certain provisions in the U.S. biofuels mandates call for the use of cellulosic ethanol. But so far, technologies for producing cellulosic ethanol have not been commercially deployed. The jump in food prices "increases the urgency to get them developed," says Bruce Babcock, director of the Center for Agricultural and Rural Development at Iowa State University.

Here again, reducing subsidies could help. Runge says that corn ethanol is squeezing out cellulosic ethanol. With corn prices at record highs, farmers have no incentive to plant the best cellulosic crops. Reducing or eliminating corn subsidies could help level the playing field. "You've got to induce farmers to grow the plants you're going to use for [cellulosic] feedstocks, rather than corn," Runge says.

But even if alternative approaches to increasing energy supply catch on, he says, ultimately, people need to use less. "I think the most important thing we could do in the United States would be to develop incentives and regulation encouraging aggressive conservation," Runge says.