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
    Overcast, 3 Jul 2007 @ 3:37pm

    Yeah - that's the thing.. As the price of corn skyrockets, more and more food companies will get away from it.

    Heck, Milk's getting pretty pricey now too. I've been going non-dairy for coffee lately and starting to shy away from other products I see creeping up in price.

    The best explanation I heard was this:

    First - ask yourself - what would the 'perfect' fuel be?
    * Answer's pretty simple - being able to make a fuel out of something that's already waste or not needed for anything else, is renewable, and in plentiful supply, eg: Garbage.

    So - from that respect, Corn's horrible - as we use it for so much else right now. However; it's renewable and it's in plentiful supply - well, for now... :)

    You know, I read a while back about a 'Fuel Vaporization' system for cars - wonder why it's not looked at more seriously -->

    US Patent# 4,177,779

    Obviously - there must be *some* way of completely vaporizing gasoline and since the fumes are far more volatile than a 'spray', it would burn far cleaner and deliver more energy..

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