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
    Anonymous Coward, 3 Jul 2007 @ 4:17pm

    Efficiency

    Gasoline at one time was far less efficient than it is now, it got more efficient over time. But let's give up on ethanol...because it isn't as efficient as gas.

    As for the 75 MPG minimum efficiency stated above...yeah right . The combustion engine is not a proprietary invention, if they could be that efficient, someone would have done it. No one, and I mean no one, has invented an engine capable of that efficiency short of all electric cars, and until this country understands that nuclear energy is not Satan's battery , that is a pipe dream.

    People need to understand, wind power, solar, nuclear, ethanol, and other renewables all in combination is the only real route available. We can't put all of our eggs in one oil well ever again.

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