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.

Reader Comments

Subscribe: RSS

View by: Time | Thread

  1. identicon
    The Man, 3 Jul 2007 @ 2:50pm

    The final straw for Ethanol

    When milk prices go up due to higher feed costs, I can manage. But when my tequila price goes up, we have got to draw the line.

    In Mexico, they have started to push (ag talk for pulling trees or crops out of the ground) Agave plants in order to plant corn. They are doing this because corn is going for such a high price right now. Less agave = higher fuel price.

    Another issue regarding Ethanol, is that we don't fully understand the toxins release by it. It is like MTBE, the greens had to have that in the fuel, they rush it to market and pass laws to force its use. Then they realize it is worse for the enviornment. Millions of dollars later they make laws forcing MTBE out. Ethanol already has some negative testing.

    Also, if Ethanol were to be main stream, every piece of open ground in America would have corn growing on it. What do you think is worse for the environment, a hole in the ground or displacing hundreds of thousands of acers of animal habitat to grow corn?

    I did not even mention the old stand by, it takes more oil based fuel to plant, grow, harvest and refine Corn into ethanol that the fuel it would create gallon to gallon.

Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here

Subscribe to the Techdirt Daily newsletter

Comment Options:

  • Use markdown. Use plain text.
  • Remember name/email/url (set a cookie)

Follow Techdirt
Techdirt Gear
Show Now: Takedown
Report this ad  |  Hide Techdirt ads
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Report this ad  |  Hide Techdirt ads
Recent Stories
Report this ad  |  Hide Techdirt ads


Email This

This feature is only available to registered users. Register or sign in to use it.