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August 27, 2010

On 'crony capitalism and green fantasies'

Matt Purple, on the the EPA's decision to delay (surely temporarily) decision to increase the concentration of ethanol legal in gasoline from 10% to 15%. In other words, the so-called E15 fuel would have to wait for approval until November:

Across America, pumps at gas stations are emblazoned with the words, "Contains 10% Ethanol." That's no free market innovation. Since the 1970s, the federal government has heavily subsidized the production of "gasohol"--a blend of 90% gasoline and 10% ethanol that reduces tailpipe emissions. For decades, progressive politicians and environmental groups have revered ethanol as a miracle additive that will help purify America's air. "No country has ever gone to war over ethanol," reads one sign on the Washington, D.C. Metro subway.

There's just one problem: Ethanol fuel is wildly inefficient. The amount of corn required to soak the fuel supply is massive. To shift America's car culture entirely from gasoline to gasohol would require 700,000 square miles of land growing corn exclusively for ethanol production. That would mean converting one-fifth of the United States into a sprawling corn farm.

Then again, the government never found a green boondoggle it didn't love. For five years now, Congress has been mandating that the fuel supply be diluted with ethanol. The Energy Policy Act of 2005 required 7.5 billion gallons of ethanol in the fuel supply by 2012. A Democratic Congress went a step further in 2007, mandating 9 billion gallons by 2008, 15.2 billion by 2012, and 36 billion by 2022.

Unfortunately, that whole Economics 101, supply-and-demand thing got in the way. The maximum amount of ethanol that can be produced to meet demand, called the "blend wall," is expected to level out at 15 billion. That will make it impossible to meet the government's mandates.

As Purple goes on to point out, it's time to put an end to this crony "corny" capitalism. Ethanol may be beneficial for greedy CEOs and craven politicians, but it's a miserable idea for almost everyone else involved. It's a deeply inferior fuel that can't survive on the free market and doesn't deserve another dime in taxpayer funding. And that's before getting into the not-so-little matter of what ethanol production does to our food supply and food prices.

Posted by Richard at August 27, 2010 7:09 AM

• On 'crony capitalism and green fantasies' - Aug 27, 2010