Monday, June 18, 2007

Ethanol: The Real High-Price Bogeyman?

Oil refineries are often looked at as the villains in the high cost of gasoline. But it appears that Congress and the Bush Administration are more complicit than we give them credit for.


The EPA recently changed the rules governing ethanol production so that it is regulated more like a liquor distillery than an oil refinery. This has the effect of allowing ethanol producers to pollute up to 2.5 times more than they could before.

The rules were changed after a request by Sen. John Thune (R-S.D.), who cited the need for increased fuel production in the wake of Hurricane Katrina and called the old rules "discriminatory."


Hmmm.

In other news, oil refineries are scaling back plans to increase refining capacity due a huge Congressional interest in incentivizing higher levels of ethanol production.

With President Bush calling for a 20 percent drop in gasoline use and the Senate now debating legislation for huge increases in ethanol production, oil companies see growing uncertainty about future gasoline demand and little need to expand refineries or build new ones.

Oil industry executives no longer believe there will be the demand for gasoline over the next decade to warrant the billions of dollars in refinery expansions — as much as 10 percent increase in new refining capacity — they anticipated as recently as a year ago.

Biofuels such as ethanol and efforts to get automakers to build more fuel-efficient cars and SUVs have been portrayed as key to countering high gasoline prices, but it is likely to do little to curb costs at the pump today, or in the years ahead as refiners reduce gasoline production.


And for good reason. So who's the real bogeyman? I never did think Exxon/Mobil has had near as much to do with man-made Global Warming disinformation as a fair number of debate-silencing elitists would have us think. Now, besides the fact that European and Chinese demand is the main thing that drove up prices this summer, I'm beginning to think that the American oil companies are even less to blame than I originally suspected.

Ethanol, besides not having near the octane of gasoline, has caused the price of tortillas to skyrocket. Sure, corn supply will increase and bring the price back down, but what happens when American consumers spit at ethanol as a replacement fuel? Will pigs eat all the extra corn?

2 comments:

  1. I recently wrote about how corn has become a major political player affecting almost every major consumer product as well as public health and even immigration. It's shameful that we so heavily subsidize crops and unduly manipulate the market like this.

    ReplyDelete
  2. It looks like ethanol has replaced environmentalists and nimby's as a scapegoat for the industry's lack of interest in building new refineries. Why won't they just tell us the real reason they're not interested in building new refineries? Because the truth would probably a.) crash the economy, and b.) make you soil yourself.

    Here's the truth.

    ReplyDelete

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