Ethanol

Corn is an ineffective source of ethanol (since you burn more hydrocarbons producing it than you get out of it), while sugarcane is a very effective source of ethanol (since you get much more energy out of it than you put into it). Brazil has vastly reduced their dependence on foreign oil by growing sugarcane and processing it into ethanol.

Brazil could even help the U.S. lower its dependence on foreign oil. However, the U.S. currently taxes imported ethanol at the rate of 54 cents / gallon and via a 2.5% ad valorem tariff. Do you think that the import tax should be removed on ethanol (which is an environmentally friendly solution produced by a reliable friend)? Many people make the point that huge quantities of environmentally unfriendly oil shipped from unstable suppliers is brought daily into the U.S. tax free.

The other side of the coin is the argument that our farmers and their industry should be protected via tariffs. Farmers have and continue to make America great. Lifting the tariffs would subsidize Brazil’s farmers and be an insult to America’s farmers. Those pro-tariff would also argue there is no guarantee that savings would be passed from big oil companies to those pumping up.

Refiners are now using ethanol in place of MTBF when blending gasoline for U.S. transportation consumption ensuring there will be plenty of demand for ethanol. Removing the tariff would reduce the price of an important piece of the blending equation (both in dollar and environmental impact terms). This would also help alleviate pain and suffering at the pump, since gasoline is the most efficiently and competitively price item in the U.S. What other consumer product is consistently priced on the street for you so you can comparison shop from the comfort of your own car? Savings would be passed on due to cut throat competition.

One thought on “Ethanol

  • May 10, 2006 at 2:29 am
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    I bet crack is competitivly priced so that you may drive from dealer to dealer to comparison shop. :)
    Yes, it would be nice if they did remove the tax on imported ethanol…but at the same time insult our own farmers. What to do? I don’t have a plausible solution, but I think it sure would be nice if ethanol were more readily available.
    http://en.wikipedia.org/wiki/E85
    I read on the above link a bit about E85 and I am suprised at how few E85 stations Ohio has. I’m disappointed.
    Regardless, I think the pros of using it (environment, ending the oil addiction, higher octane) outweigh the cons (heavily taxed, hard to find). I will continue to fill up with the idea in mind that I as a consumer I am convincing the vendor to put up more stations and simultaneously convincing the government to get it to consumers at a lower cost. Yes, that is an uphill battle, but what is one to do?
    C

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