Children Of The Corn

The most ridiculous issue in the whole energy argument is that the US has vast reserves of oil and even more natural gas which, by the way, can be used for diesel fuel which can run in vehicles that are currently available. By doing nothing about influence-peddling in Washington, we subject ourselves to bad decisions driven by power hungry politicians versus decision made in the best interest of this country by public servants.

From IBD:
Posted 5/24/2006

Energy: Sen. Hillary Clinton supports the use of ethanol to help fuel our cars, but she is silent on the issue of eliminating tariffs on the imported variety. Does this have anything to do with the Iowa caucuses?

Ending the current tariffs on imported ethanol would not only help reduce dependence on foreign oil, as Clinton wants. It would also strike a blow against corporate welfare, expand free trade, reward needed friends versus hostile states and cut fuel prices at the pump. And if ethanol has both economic and environmental benefits, shouldn't we be trying to get as much of it as possible at the best price?

We can understand opposition to imported ethanol from, say, Charles Grassley, the senator from corn-rich Iowa. But why is the junior senator from New York dragging her feet on the issue?

New York's senior senator, Chuck Schumer, with whom we rarely agree, reckons that lifting the tariff could cut pump prices 8 cents a gallon, since federal law requires 10% of gasoline be made of ethanol, which is made more cheaply in a country like Brazil.

"America is getting clobbered at the pump, and ethanol is the icing on the cake," Schumer has said. But when Hillary was asked earlier this month if she supported lifting the tariff, her Clintonian response was, "I'm looking at that."

The difference is that Schumer isn't running for president, and, unlike Iowa, Brazil doesn't have any electoral votes.

According to the Congressional Research Service, Brazilian production costs are 40 to 50 cents lower than in the U.S. If we are serious about increasing use of ethanol and lowering gas prices, the tariff makes no sense.

Would we rather import ethanol from Brazil or oil from Hugo Chavez's Venezuela?

Currently, the U.S. provides the domestic ethanol industry with a 51-cent tax credit per gallon produced. At the same time, it slaps imported ethanol with a 54-cent-a-gallon tariff. This prevents refineries from buying it wherever it's cheapest on the global market.

Between 1995 and 2004, U.S. taxpayers paid $41.9 billion to U.S. agribusiness, including politically active corporate giants such as Archer Daniels Midland. ADM got $4.5 billion in 2004 alone, according to the farm-subsidy database of the Environmental Working Group. Price-gouging and profiteering, anyone?

Questions about ethanol remain. Tad Patzek, a University of California, Berkeley, engineering professor, published a paper last year saying it takes six units of energy in farming, distillation and transportation to yield one unit of energy produced by ethanol in a car.

Ethanol can't be transported by pipeline, but must be carried from distillation plants via truck and railroad, which creates additional energy costs. Ethanol produces only two-thirds the mileage of a gallon of gasoline.
Yet lawmakers are pushing for even more subsidies to sell E85, a mixture of 85% ethanol and 15% gasoline.

The Detroit News recently published a cost-benefit analysis of E85 used by Michigan consumers. It found, among other things, that 1.4 gallons of E85 are needed to drive a car the same distance that one gallon of gasoline will take it.

Ethanol should be allowed to compete as a fuel source on its own merits, without mandates, subsidies and tariffs. If its benefits are as outstanding as advertised, and if there truly is a demand for it, the ethanol industry will flourish.

Meantime, in the absence of free markets and free trade, and as we fuel our cars, the tariff on imported ethanol remains a huge crimp in the hose. Hillary could lead the charge against it, but will she?