Wesley Clark has two main arguments:

• The building of oil infrastructure was subsidized by government, therefore subsidizing ethanol infrastructure is only fair
• Using government money to install ethanol pumps and mandating that new vehicles be flex-fuel compatible would create an “open market” where ethanol can compete with gasoline

An open market for fuel choice in America would be great. I don’t believe that:

(1) mandating the production of vehicles that are able to run on ethanol

(2) using government money or tax credits to encourage gasoline stations to install E85 pumps

(3) extending the tariff on foreign ethanol

at all constitute an “open” market. Nor does the RFS mandate requiring that over 10 billion gallons of ethanol be blended into the fuel supply each year. Corn ethanol can compete, just not with anything produced abroad, not without a mandate requiring that Americans use it, and not without a tax credit or massive infrastructure investments.

Here is Wesley Clark’s statement in support of extending the tariff:  “There is absolutely no reason for the United States to trade dependence on foreign oil (for) dependence on foreign produced ethanol.”

That statement, along with the letter above, display an amazing ignorance of economics. Apparently international trade is harmful and we should erect more trade barriers to reduce our dependence on anything produced outside of the good ole US of A.

The less obvious point here is that billions and billions of dollars of government investment spent on infrastructure to persuade blenders and gas stations to offer E85 is also not, by any reasonable definition, an “open market.”

Media coverage of the ethanol issue has appeared in The Wall Street Journal, The Washington Post, The Chicago Tribune and The New York Times. Also see Robert Rapier’s blog, Energy Squared.

The two biggest proponents of the extension are the Renewable Fuels Association (RFA) and Growth Energy. They are currently split over their preferred type of government support for the industry. RFA is promoting a 5 year extension of the VEETC (and presumably the tariff) while Growth Energy supports a phasing out of the tax credit with government funding going into developing the infrastructure to promote ethanol sales.

They have been noticeably silent on the issue of whether or not the tariff will be extended. The tariff, $.54/gallon, prevents the Brazilian ethanol industry from competing with ethanol produced in the United States. When prodded, the domestic ethanol producers have successfully muddled the issue over threats of job losses if the tariff expires, while asking why the U.S. should replace its dependence on foreign oil with a dependence on foreign ethanol.

]]> http://www.factsaboutethanol.org/2010/08/10/following-the-ethanol-debate/feed/ http://www.factsaboutethanol.org/2009/05/18/ethanol-news-distilled-16/ http://www.factsaboutethanol.org/2009/05/18/ethanol-news-distilled-16/#comments Mon, 18 May 2009 19:51:02 +0000 FactsAboutEthanol.org Editors http://www.factsaboutethanol.org/?p=619 News Organizations

Food Prices: Myths vs. Reality
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May 16, 2009

Special Report: Energy Future of Biofuels Expected to Remain Bright
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New York Times
May 19, 2009

Brazil hopes to team up with China in biofuel-media
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May 18, 2009

Ethanol rebellion building in Congress
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May 11, 2009

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Columbus Dispatch - Columbus,OH,USA
May 12, 2009

EDITORIAL: Ethanol subsidies
Hutchinson Leader - Hutchinson,MN,USA
May 12, 2009

Goodlatte wants increased ethanol blend proposal rejected
by Julie Harker
Brownfield - Jefferson City,MO,USA
May 11, 2009

Washington, DC: Today Congressman Bob Goodlatte was joined by many other Members of Congress in sending a letter to President Barack Obama, Agriculture Secretary Tom Vilsack and Environment Protection Agency (EPA) Administrator Lisa Jackson urging them not to approve the current request submitted to EPA to increase the ethanol blend in gasoline. Raising the ethanol blend above 10% could result in serious economic consequences that could negatively affect already struggling American consumers.

“Raising the ethanol blend requirement could decrease automobiles’ fuel economy while at the same time increasing food costs for all Americans,” said Congressman Goodlatte. “These are real consequences that must be addressed, especially given this tough economic time. Before EPA makes a decision on increasing the ethanol blend, they should examine how an increase in the blend requirement will affect fuel economy of vehicles and already rising food costs.”

Since ethanol has lower energy content per gallon more fuel is required to travel the same distance, which will mean drivers will have to fill their gas tanks more frequently. In fact, the Department of Energy (DOE) has begun assessing the use of ethanol blends and their effects on vehicle performance. In their recent report, the DOE tested 13 different vehicles with ethanol blends up to 20% and, on average, fuel economy of the vehicles decreased by over 7 percent.

Additionally, the letter calls on EPA to examine how an increase in the ethanol blend will affect other aspects of our economy, such as food prices. Ethanol is a major driver of corn prices. Last year we saw the price of corn reach record highs resulting in increased costs for consumers and livestock producers. As a result of the record corn prices, food prices increased as farmers shifted land from these commodities to plant corn. Increasing the ethanol blend will only further exacerbate this problem.

Goodlatte continued, “While I am a strong supporter of renewable fuels, increasing the ethanol blend will have unintended consequences for many Americans.”

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Blogs
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Blogs

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