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Tuesday, April 15, 2008
Jon Sanders :: Townhall.com Columnist
Meet the New Big Energy, Same as the Old Big Energy
by Jon Sanders
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With unemployment at 10.2%, what will happen by the end of Obama's first term?



If you are a politician and you favor federal support for ethanol and other biofuels, would you kindly stop telling voters you care for the poor? We all expect candidates to tell some whoppers, but even so, that one is just plain unseemly.

By all means, examine the justifications for promoting biofuels. Conventional fuels are bad for the environment and contribute to global warming; oil prices are going through the roof; and we don't want to be held hostage to an energy cartel that keeps supply down to maximize profits.

It's one thing to speak wistfully about finding a fuel that will do all those things, but it is another thing entirely to discover it. The higher oil prices spike, the more entrepreneurs and independent investors will seek solutions. Why? Because there is simply too much money to be made by the person or company that figures it out. The profit motive is good; it impels people to search for solutions. Whether that solution is finding ways to tap into an American oil deposit that's larger than ANWR, or finding the next big energy break, or pushing for more nuclear power, or some combination, it doesn't matter -- just don't let government get in their way. Government is infinitely more capable of hampering the search for solutions than it is in finding one.

The last thing we need is our tax money used to promote a governmentally approved "market fix." If government thinkers were any good at picking the Next Big Thing, they'd be out there making money doing just that. The simple fact is, they're terrible at it. Even worse, their selections have the weight of government behind them, so they don't face any market repercussions for making colossal screwups. We the people have to bear the burdens of their mistakes instead -- not just overtly, but also in ways unseen and in paths not taken, having been blocked by government.

Look what has happened in the few short years since Congress passed and President Bush signed the Energy Policy Act of 2005 with its "renewable fuel" requirements. The insulated thinkers in Foggy Bottom reached amid all this market uncertainty and hand-selected the energy alternatives to save America and the planet. And what they've accomplished is already as thorough a cock-up as possible even from that rarefied assemblage of bumblers.

Is their solution better for the environment per the standards of manmade-global-warming orthodoxy? No. The most recent studies have shown that, taking into account all the factors involved in producing biofuels, including the need for shipping and for converting land to cropland, they would increase greenhouse gas emissions substantially over the amount contributed by conventional fuels.

What of oil prices? They are still on the increase. Their rise is being eclipsed, however, by the staggering increase in the worldwide price of food. What does the price of food have to do with energy policy? Because our savants' energy is made from food, especially corn, one of the primary staples worldwide.

Corn prices are at all-time highs, having passed $6 a bushel this month after hovering mostly between $2 to $3 the last ten years. This sizeable increase is affecting all kinds of markets worldwide; increasing the prices not only of consumer items and cereals made from corn, but also of beef, chicken and dairy products (livestock that is corn fed), and substitute goods such as grains. Continued...

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About The Author
Jon Sanders is a policy analyst and research editor at the John Locke Foundation in Raleigh, N.C.

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gettingoldernwiser, Fred_PA_2000:
gettingoldernwiser--
"I believe "BIG OIL" is perfectly happy exporting USA oil at these inflated prices..."

Unless I'm missing something, I think it's been quite a while since the US exported any significant amounts of crude oil or refined products.

Fred_PA_2000:

Good point regarding investors...

The analogy that I always go back to is that during the housing boom, I don't recall any homeowners saying "Gee, it's just not fair that I should get $300,000 for a house that I paid $160,000 for just 10 years ago...I think I should either sell it for a "fair" profit, say $190,000, or maybe I can take the $140,000 windfall and put it into low-income housing."

No, the way it actually went was "hey, bring me more offers, I want to start a bidding war"

Profits are only evil when they go to the other guy.

ditto
I was reading where we have identified 32 countries where life is so marginal that rises in food prices could destabilize their governments. When food is gone, after all, civil war will follow. The UN and world food relief agencies are also repeatedly saying that they cannot provide the food relief they did, as they can no longer purchase the same amount of food they once did.

How ironic. The amount of energy it takes to plant, harvest, and convert corn into ethanol is greater than the amount of energy the ethanol produces, yet we continue merrily down this absolutely foolish track. I'd like to blame this on the Democrats, but, unfortunately, in 2005, the presidency and both the senate and the house were controlled by the Republicans. So this isn't about Al Gore, this is about the utter stupidity of elected officials pandering to a minority in the farm belt whose votes they wanted to harvest.
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