Wednesday, November 28, 2007

Ethanol cure worse than oil disease

Today's Wall St. Journal reports that markets are starting to doubt our country's ethanol subsidies:
A recent study by the Organization for Economic Cooperation and Development concluded that biofuels "offer a cure [for oil dependence] that is worse than the disease." A National Academy of Sciences study said corn-based ethanol could strain water supplies. The American Lung Association expressed concern about a form of air pollution from burning ethanol in gasoline. Political cartoonists have taken to skewering the fuel for raising the price of food to the world's poor.
Hopefully, this will cause Congress to re-think our ethanol policies, including our $0.54 tarriff on imported ethanol, which the New Yorker called "absurd even by Washington standards."
Because of the ethanol tariffs, we’re imposing taxes on fuel from countries that are friendly to the U.S., but no tax at all on fuel from countries that are among our most vehement opponents. Congressmen justify the barriers to foreign ethanol with talk of “energy security.” But how is the U.S. more secure when it has to import oil from Venezuela rather than ethanol from Brazil? These tariffs are bad economic policy, bad energy policy, and bad foreign policy. Talk about your Domino effect.
But with the presidential primary season underway, this is unlikely to happen (Fortune),
Iowa, home to the first-in-the-nation presidential caucus, is the biggest corn-growing state in the country, and in Iowa ethanol isn't just another campaign issue. It's the cash cow, the golden goose and the fountain of economic youth all wrapped up in one.
Stossel takes on the ethanol myth:

1 comment:

  1. Great piece and several conclusions can be drawn by the second thoughts on ethanol post.

    First and foremost, we should reconsider the role that small agricultural states like Iowa play in presidential primary politics. Iowa has been able to leverage its early straw poll position to extort massive ethanol subsidy pledges from candidates on both sides of the aisle. People need to stand up to the heinous ethanol lobby and insist that tax payers quite underwriting this ridiculous display government malfeasance.

    I recall the alacrity and glee with which global warming believers embraced ethanol as a solution to our perceived global warming woes. They have the nerve to accuse the current administration of a "rush to war," yet they eagerly embrace loopy energy sources without so much as applying basic economic analysis or contemplating the consequences of their advocacy positions. Talk about people with credibility problems and shameless behavior.

    It's important to frequently slaughter these sacred cows of the left. Hopefully the national dialog will start applying some of the common sense provided by Stossel.