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
    cutter892, 3 Jul 2007 @ 2:40pm

    Re: Substitutions creating substitutions

    Hydrogen is far more volitial than gasoline. In fact liquid gas is not even explosive (do not try this at home) thats why in the dead of winter you can throw lit cigrattes into a bucket of gas and it won't explode, but if you do it on a warm day the fumes are highly flamable. Also there are only a few ways of harnessing hydrogen for power Nuclear fission (Homeland Security would love to hear about a car using that), elctrolisis and fussing hydrogen and oxygen together for water or taking hydrogen peroxide exposing it to stainless steel and burning the now seperated hydrogen and Oxygen for fuel(this is how a Soviet nuclear sub sank. The torpedos used this method for proplsion. The fuel leaked the liquid broke down and a spark blew the entire sub to the bottom of the ocean). What I'm trying to say is hydrogen is just to dangerous (remember the Hindenberg).

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