Can The Ethanol Market Stand On Its Own Two Feet?

from the etha-what? dept

Soaring energy prices have created an ideal climate for alternative energy investment, as evidenced by the boom in that space. You'd think, then, that with the market doing a good job of sorting things out, there'd be little need for the government to intervene. But while entrepreneurs and VCs are seeking to build sustainable, profit-making businesses, the ethanol industry has sought to profit from the largesse of the US taxpayer. The industry has been helped by direct subsidies as well as indirect ones, such as laws that impose added costs on its rivals. While many people champion higher CAFE standards in order to protect the environment, the ethanol lobby has been a particularly big booster of them, because of a 1988 law carved out an exception for vehicles that could run on ethanol. Meanwhile, this favorable treatment towards the industry causes problems in other pockets of the economy. Increasingly, companies have to be concerned with "agflation", the soaring price of agricultural commodities due to the heightened demand for corn (which, as you learned in econ 101, increases prices for corn substitutes, like rice and wheat). If ethanol is going to be a meaningful energy source in the future, it needs to stand on its own in the market. Otherwise, the existing setup appears to be just more counterproductive agriculture subsidies, cynically concocted in the name of national security and the environment.

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  1. identicon
    Steven, 3 Jul 2007 @ 12:56pm

    Greedy.

    People are always going to look for a way to make things cost more. They may try and mislead us into believing they're here to help. But this is a cynical society, and too many people are looking out for themselves to realize what the future holds for us all as a single society. If ethanol gains any success it is logical that more people will begin to use it. This will cause even more excuses for the business to make money. Soon the the people selling ethanol will see how large their customer base has grown, and start to gradualy demand more money. Not only will the people selling ethanol make money, but soon people will be charging unreasonable fees to the non so smart consumer to make cars able to run on ethanol. Soon vehicle manufacturers will start making cars that run on both ethanol and gasoline, and charing unreasonable amounts of money. They'll say it's the wave of the future, and you have to pay a little more these days. Soon enough the ethanol business will become to pricey, and we'll all move on to propane, the the next solution, and the next, and the next... Until every single type of potential fuel has been exploited.


    This is some what off subject, but there are a lot of consumers out there that don't know very much, and will always be exploited.. They see something in a commercial, and realize for some reason they need it. Maybe it was advertized as classy, or smart, or the new trend of some sort.. Society is becoming less sophisticated all the time making it possible to exploit others. We percieve everything entirely wrong these days.. It's like the new iphone idiot consumers are going to buy one, anduse it for only a few things. But they will never use it to it's full potential because they just bought it to impress their friends. So what if it could make traveling easy by looking up directions, or maybe a network admin could use it similar to a pocket pc to check the server uptime. People in socitey take one look at the commercial, say wow that's neat, buy one, then never realize how amazing it really is. And that's just my opinion on corporations. I'm all for making a profit.. But not for the exploitation of a lesser sophisticated society. And yes.. there are the good people out there that do good deeds, and the corporations that do not exploit. Go honesty!

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