Saturday, January 27, 2007

The Ethanol Swindle

8 Big Lies about ethahol exposed in today's Chicago Sun Times:

Lie #1: Ethanol will lead to energy independence.
Lie #2: Ethanol is economically competitive.
Lie #3: Ethanol reduces gas prices.
Lie #4: Ethanol is a renewable fuel.
Lie #5: Ethanol reduces air pollution.
Lie #6: Ethanol reduces greenhouse gas emissions.
Lie #7: Ethanol subsidies are necessary to level the playing field with petroleum.
Lie #8: Switchgrass will set us free.

"The truth is: If ethanol has commercial merit, it doesn't need to be so heavily subsidized. If it doesn't have commercial merit, almost no amount of subsidy will make it economically viable."

As the Wall Street Journal reminds us, "ethanol is produced by mixing corn with our tax dollars."

4 Comments:

At 1/28/2007 9:47 AM, Blogger dld said...

1.How can ethanol lead to energy independence with such a small market share. Mr. Perry this is Econ 101.
2.Ethanol is economically competitive - true. Petroleum has enjoyed and continues to enjoy subsides and huge tax advantages (along with the pharmaecutical industry and numberous others). Mark when you talk about ethanol subsidies please remember to metion this facts as well. You might also mention that the US Navy protects the oil coming into the country from all over the world. What does that cost the US tax payer??
3. Reduces gas prices - if ethanol was not going to cause a shift in suppy and demand why is the petroleum indudtry so against ethanol? It wouldn't be because the petroleum industry would like to control the market share would it? Finally, with the small market share I don't think ethanol has been responsible for the huge spikes in gasoline prices or will cause price reductions in the future. Again, Econ 101, I am surprised Mark that you have not seen through all of this before now.
4. Yes ethanol is renewable. Have you been on a farm Mark. Corn, wheat, barley come up new every year. That's why it's called re-new-able.
5. True, ethanol reduces greenhouse emissions.
6. See answer 5.
7. See answer 2.
8. Switchgrass is another in a long line of cost reductions coming for the ethanol industry that will be passed along to the US citizens.

The truth is I am in favor of eliminating all subsidies and tax advantages! But let's not cherry pick one industry (oil) over another (ethanol). That's not free enterprise and it's not good for America.

 
At 1/28/2007 2:17 PM, Blogger Mark J. Perry said...

Federal subsidies for oil companies amount to about 1/3 of 1 cent per gallon of gasoline. Subsidies for ethanol are about 51 cents per gallon, or about 150X the subsidies for petroleum per gallon.

 
At 1/28/2007 6:41 PM, Anonymous Steve E. said...

Every fuel station I have seen selling E85 sold it for 10-15% less than reg unleaded. That sounds great until you find out that the average car will get 20-30% less mpg. As long as this is the case, the case for Ethanol seems shakey. Most people are not going to choose to spend more dollars per gallon. If ethanol is economically competive, its not showing up in my calculations. Dont get me wrong, I'm all for independence from foreign oil, however, unless I can break even on E85 vs. gasoline, I'm sticking with gasoline.

 
At 1/29/2007 9:22 AM, Blogger dld said...

Mark you have failed.
Mark you only answered one of the eight statements you reported to be true. How about the other statements? Regarding oil subsidies you failed to acknowledge the cost to tax payers for US military support for oil. You have failed to acknowledge the exploration subsidies the oil companies enjoy. You have also fail to acknowledge how long the oil companies have been receiving these subsides, tax advantages, exploration tax credits,etc. Let's add this all up and see where we are over time for an industry that has posted record profits!

 

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