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Ethanol won’t solve U.S. energy problems

The Big Three automakers, in an effort to deflect yet more fueleconomy regulations, are pushing Congress to create more subsidiesfor ethanol. For now, that’s not a good solution.

Ethanol, an alcohol-based fuel created primarily by distillingcorn in the United States, is not a cost-effective alternative topetroleum. An array of tariffs and subsidies make it even lesseconomical.

Support for ethanol should be seen as part of the federalgovernment’s farm subsidy program.

Congress has already mandated ethanol use in gasoline. InMichigan, most gasoline is a blend of 10 percent ethanol and 90percent petroleum. Congressional requirements and subsidies haveled to an increase in the production of ethanol, to 4 billiongallons last year from 1.7 billion in 2001. As of late last year,24 ethanol production plants were in the works.

However, if pure ethanol were substituted for gasoline, that 4billion gallons would cover total U.S. gasoline consumption onlyfor about 12 days.

Yet the automakers are asking Congress to increase subsidies forgas stations to sell E85, a blend of 85 percent ethanol and 15percent gasoline. This even though ethanol only produces abouttwo-thirds of the mileage of a gallon of gasoline.

And the production of ethanol consumes a significant amount ofenergy. MIT chemistry professor John Deutch, a former CIA director,recently contended in The Wall Street Journal that it takestwo-thirds of a gallon of oil to create one gallon of ethanol.University of California at Berkeley engineering professor TadPatzek published a paper last year saying it takes six units ofenergy in corn farming, distillation and transportation to yieldone unit of energy produced by ethanol in an automobile. Ethanol,for example, can’t be transported via pipeline – it has to becarried from distillation plants via truck and railroad, whichcreates additional energy costs.

There may be cheaper forms of ethanol than domestically producedcorn alcohol, which already receives a 51-cent-a-gallon federalsubsidy. But it would have to be imported, and the United Statesimposes a 54-cent-a-gallon tariff on imported ethanol, even thoughthe ethanol yield from Brazilian cane sugar and other forms ofsugar is significantly higher than the yield from U.S. cornproduction.

The bottom line, as Jerry Taylor, an energy analyst at thelibertarian Cato Institute recently noted in The Arizona Republic,is that the price of June 6 deliveries of pure ethanol is about$2.67 per gallon, while the wholesale price of pure unleadedgasoline on that date is around $2.09 per gallon.

Ethanol may be part of the answer for reducing U.S. oilconsumption. Certainly, mileage mandates from Congress are not theanswer and the Big Three should not be afraid to say so.

But if we are serious about ethanol, we will drop the tariff onimports and cut domestic subsidies for it. If there is truly ademand for it, the ethanol industry will flourish. If not, best tofind out now and focus our energy quest elsewhere.