Are Ethanol and Washington Headed for 'Divorce'?

(MoneyWatch)  Now that food riots are breaking out around the world, there are serious moves being made to get the federal government to cut back on the subsidies it gives to ethanol producers, and to retire the laws mandating ethanol production.

Ethanol is increasingly taking blame for pushing up the price of corn and other crops. In the United States, higher prices have led to soaring costs for many food processors, and higher retail prices for everything from Coca-Cola to chicken cacciatore. In some developing countries, it has led to widespread protests and even violence.

On Friday Texas Gov. Rick Perry asked the Environmental Protection Agency to waive half of the so-called renewable-fuel standard for ethanol in his state. In a letter to the EPA (pdf), he called it the "best, quickest way" to put the brakes on food costs.

Ethanol isn't the only cause of rising food prices, but it is increasingly seen a a major component. And it should be borne in mind, of course, that Perry represents the state that produces the most oil in the country.

But he's hardly alone. The voices calling for an end to the government's nutty ethanol policies are swelling into a chorus. The Center for American Progress, along with other groups, has mounted a full-court press on the matter. None of the three presidential contenders is beholden to the farm lobby, and none of them have pledged to continue government support for the product.

"After a decades-long courtship, the marriage between ethanol and Washington is teetering on an ugly divorce," concluded a particularly meaty CNBC article.

Beyond the political pressure, and even the riots, economics might be what finally changes people's minds ?€" which is ironic since the entire ethanol industry is built on attempts to subvert economic laws. But despite all the meddling, ethanol prices are rising, making it less of an "alternative" to gasoline in terms of cost. CNBC noted that the "real" cost of ethanol-blended gas when mileage is taken into account (it's less efficient than gasoline) is actually higher than ethanol-free gas. More people are realizing that as they whip out their credit cards at the fuel pumps.