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
    SPR, 3 Jul 2007 @ 2:47pm

    Alternate fuels and alternative vehicles

    I have a Prius and am very pleased with averaging 46 mpg, even though I don't have a light foot. The max of 60 they advertise is based on driving more gently, and not running the AC (This is not a complaint, just a comment). I think it is time we realize that our backs are against the wall (and have been for more time than we care to admit) and make some tough decisions that are guranteed to displease someone, no matter what we do. 1. Many more nuclear power plants using more modern technologies than existed in the 70's and 80's. 2. Legislatively mandate that all vehicle manufacturers must produce vehicles that yield a minimum of 75 mpg. 3. Open the Alaskan oil fields for drilling and extraction (I've seen the pictures and stories that provide evidence that the ALaskan pipeline is actually helping the wildlife, and I believe this to be true.) 4. Uncap the federally sealed oil wells in Pennsylvania, Ohio, West Virginia and Kentucky.

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