Before we start, check out my latest Alaska update over at Glibertarians. And thanks to our pals over at The Daley Gator for the linkback; if you’re not reading The Daley Gator, well, daily, you should be!
Here’s an interesting summary of the stupidity that is the U.S. policy of subsidizing ethanol. Excerpt:
The first subsidy for ethanol as fuel arrived under the Carter administration when Americans, shocked by turbulent, rising oil prices, grasped at straws, or more specifically, corn stalks, seeking to cushion the blow. But ethanol’s boom truly arrived thirty years later with the passage of the Renewable Fuel Standard program, requiring a small percentage of “renewable” biofuels – almost always corn ethanol – to make up a small proportion of conventional gasoline in transportation fuels, usually about ten percent.
Fifteen years after the program’s inception, it’s becoming apparent that corn ethanol has been a failure for everyone except corn growers. For starters, it has driven up the price of corn. Again, that’s great for corn farmers and corn-growing states like Iowa, Illinois, Nebraska, and Minnesota, but not so great for consumers across the country. Whether its for feeding livestock, distilling sugars, or making food products, corn goes in to much of the stuff we eat, so when its price goes up because of ethanol, food prices increase for all Americans.
“The ethanol program functions as a hidden food tax—the most regressive of all taxes,” Mario Loyola, a senior fellow at the Competitive Enterprise Institute, wrote for The Atlantic last year. “And the effects on poor Americans are magnified for poor countries that depend on imports of food.”
Ethanol’s government-mandated grasp on agriculture is best exemplified with a startling statistic: “In the United States, the cultivation of corn for ethanol now requires a staggering 38 million acres of land—an area larger than the state of Illinois. By comparison, the total area of cropland used to produce grains and vegetables that humans eat is only about twice that acreage,” Loyola wrote.
The inestimable Rojito has a flex-fuel engine, meaning it can run on up to 85% ethanol fuel, or E85. When I first purchased the truck, about thirteen years ago, I ran a few tanks of E85 through it to see how it worked. The truck ran fine on E85; in fact, it seemed a little peppier, which is odd, because the energy content of the ethanol-based fuel is a lot lower than regular gasoline. Because of that, though, Rojito averaged only about 11MPG on E85, compared to about 20MPG on the more usual E10.
Even at a buck a gallon cheaper for E85, it actually cost more.
This is a manifestly stupid policy. The problem is, as the linked article points out, that the popularity of the subsidy in farm states is likely to result in us being stuck with it for the foreseeable future. Of course, it’s not as though we can actually let market demands determine agricultural prices; ethanol isn’t the only stupid subsidy we gift to agricultural products.