Ethanol madness
May 8, 2006
As petrol prices rise, policymakers and venture capitalists are suddenly embracing funky alternatives. Will the fad last?
In a word; no.
Alternative energy | Canola and soya to the rescue | Economist.com
When oilman George Bush calls for more research into ethenol and biodiesel, you know that the beltway disease has struck again. Panic on the Potomac.
Growing corn to be used as a fuel additive just doesn’t compute with me. Of course, corn processed through beef cattle to satisfy our appetite for steak also jams my mental CPU. Since I don’t grow row crops for a living, I can assert with impunity that market forces will do a better job of maximizing the economic output of use of land than Government planning. On the other hand, I am only one generation away from the farm, which means that I still harbor suspicions that I really don’t know what I’m talking about on agriculture matters. Most of our congresspersons are not so hindered.
The linked article seems to do a good job of summing up the American dilemma.
The notion of American farmers defying the tide of capitalism to grow their own fuel is a glorious delusion. But … Congress has some big decisions to make about biofuels. To what extent, if any, should government subsidise this nascent industry? Already it has received plenty of help. Ethanol producers get a tax credit worth 51 cents a gallon, much to the delight of industry powerhouses such as Archer Daniels Midland. There is also a 54 cents-a-gallon tariff on imports of ethanol from Brazil. Starting with the removal of that tariff, Congress needs to rethink its wrong-headed energy policies. Nathanael Greene, of the Natural Resources Defence Council, argues that the federal government’s most important immediate step should be to enact a loan guarantee to create America’s first cellulosic ethanol plant, which would probably be built in Idaho.
Dave, still wondering whether biofuels are good or bad for us.
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