Right! Repeal or limit ethanol subsidies.

In Econ 101 this is called “opportuniy costs”. If you use resources (say land) to grow more of “this” than you canNOT have more of “that”. One (very politically incorect) suggestion to increase the supply of OIL, say in Alaska. But this might increase those nasty oil company profits, whereas subsidies are so much more fun for Congress.      Statmann

This ethanol thing is WAAAAAYYYYYY out of hand.  I had the pleasure of speaking with the Louisiana Commissioner of Agriculture the other day (delightful fellow named Mike Strain).  He tells me that now in Louisiana, gas stations don’t have to TELL YOU if you are buying an ethanol blended fuel, nor what percentage of that fuel is ethanol or any other oxygenate for that matter.  Apparently the legislature here very quietly removed that restriction.

If you live in La., you might check your owner’s manual.  You’ll find that even though your car or truck may be able to utilize an oxygenate blended fuel, doing so “may cause engine problems, at which time you should seek fuel from a different station.”  (this from my 2007 Honda owner’s manual).  In my wife’s 2004 Toyota Sienna owner’s manual, it specifies that damage caused by oxygenate fuels are not covered under any warranty, and also mentions that it may “damage the paint if spilled on the outside of the vehicle.”

Commissioner Strain also told me he thinks in Missouri that oxygenate blends are REQUIRED to be sold at every station. 

The really sad thing is, the blended fuels decrease gas mileage and make my brand new vehicle run poorly, and I can’t even tell (without going inside and interrogating the poor clerk) whether I’m buying it or not.

Yep, this ethanol thing is WAAAAYYYY out of hand.

KTF!...mrb

Actually, just about any area in the country that has been designated by the EPA as “non-attainment for ozone” must sell gasoline with oxygenated fuels.  The oxygenate that used to be mandated from the feds was MTBE, but then that proved to be too toxic when leaked into groundwater, so now we have ethanol.  Here in the Houston area, the blend is up to 10% ethanol.

Of course, with the new EPA proposal for lowering the maximum allowed ozone concentrations, several hundred more counties will be designated “non-attainment”.  Guess what, more federally required used of oxygenated fuels.

Sooooo…why doesn’t the Holy See start talking to the oil producing countries of the world and encourage them to pump more oil?  That’s the reason we are converting to bio-fuels.  I mean, three years ago, when gas was under a $1.50 a gallon in the US, there was no big push for ethanol.  The reason crops are being diverted is because we need the fuel.  No fuel, no crops for food.  It’s a pretty simple equation.

We will do fine without ethanol.  Food has a higher and prior claim over energy.  In some ways, this reminds me of Mao’s five-year-plan where he insisted that farmers stop farming and instead make steel.  The result was mass starvation in China where MILLIONS perished.  Americans are not in any danger of starvation, but many people in LDCs may indeed starve because they are priced out of the market.

American ethanol policy serves no one’s interest except ADM and Iowa.  I think that both ADM and Iowa will do just fine without the ethanol subsidies.

“The reason crops are being diverted is because we need the fuel”

I wish that were the reason. The fact is that we subsidize both the production and the consumption of ethanol fuel. Without the subsidies, it would still happen (e.g., to help reduce some kinds of air pollution) but on a smaller scale, leaving more food to eat.

The subsidy distorts the market. If without the subsidy people use ethanol because they need it as a fuel, then so be it. But the current subsidy system artificially promotes using crops as fuel rather than food. Perhaps that made sense when gasohol production was in its commercial infancy and the American farmers needer more outlets for their crops. But the world has changed.