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Monday, April 28, 2008
Senator Kay Bailey Hutchison :: Townhall.com Columnist
Undoing America's Ethanol Mistake
by Senator Kay Bailey Hutchison
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In the Amazon basin, huge swaths of forest are being cleared to meet the growing hunger for biofuels.

In addition, relief organizations are facing gaping shortfalls as the cost of food outpaces their ability to provide aid for the 800 million people who lack food security.

The recent food crisis does not mean we should entirely abandon biofuels.

The best way to lower energy prices, and reduce our dependence on foreign oil, is to accelerate production of all forms of domestic energy.

Expanding biofuels while refusing to take other measures, such as lifting the ban on oil and natural gas production in Alaska and the Outer Continental Shelf, is counterproductive. We should be tapping into a broad portfolio of energy options, including clean coal, nuclear power and wave energy.

The key is increasing energy supply. By taking these measures, we can enable biofuels to be part of the energy solution, instead of contributing to the energy problem.

Congress must take action. I am introducing legislation that will freeze the biofuel mandate at current levels, instead of steadily increasing it through 2022.

This is a common-sense measure that will reduce pressure on global food prices and restore balance to America's energy policy.

As the Senate debates this issue, we must remain focused on the facts.

At one point, expanding biofuels made sense for America's energy security. But the recent surge in food prices has forced us to adapt. The global demand for energy and food is expected to rise about 50% in the next 20 years, and the U.S. is well-positioned to be a leader in both areas.

That will require a careful, finely tuned approach to America's farm products.

By freezing the biofuel mandate at current levels, we will go a long way to achieving that goal.

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About The Author
Senator Hutchison chairs the Senate Republican Policy Committee and is representing Texas in her third full term in the Senate.
Another great economic truth...
...which was left out of this article is that you can always tell a good idea by how much private capital is drawn to it. Sure, many good ideas go unfunded. That's not because they aren't good ideas, but because there is a limited amount of capital to go around, and the most attractive ideas are funded first, as they should be. The govt plundering capital through confiscatory taxation further drains this pool of potential capital, leaving more good ideas to languish. What govt does when it subsidizes ideas that private capital has found unattractive, is to remove the very capital that is needed to fund thousands of good ideas, in order to fund one that dropped off the list. Ethanol is just such an idea. It's time is not yet ripe. It may prove to be unnecessary in the relatively near future as other, presently unimaginable or nascent, technological breakthroughs make alternatives more attractive as investments.

In short, if it was such a good idea it would be sufficiently attractive as a profit maker to attract the necessary capital on its own merits. The amount of capital invested in it from private resources is a reliable indicator of how mature or attractive a business is. Ethanol does not merit special attention because a body of politicians declare it to be a good idea. Politicians have a positively dreadful track record picking winners in the marketplace. Let them put their own, private, money (they seem to have plenty of it) where their mouths are, and leave my money alone!

High oil prices aren't so bad
The corn lobby is an obvious culprit, but the sugar lobby sucks, too. With inflated sugar prices, producers have no desire to produce sugar-ethanol, because the fuel market is more competitive and less sheltered than their current arrangement.
Hockey Goon makes a good point:
"...True ethanol has less BTUs than gas, but it is also much higher octane - higher compression ratios woudl easily make up the differance (why do you think dragsters use alcohol instead of gas?)."
Galltegfa writes:
"China and India are offering the $100; why should the oil cartels take $60 (or less) from us? ...We have oil, natural gas, coal, shale oil, nuclear materials. In fact, now that oil is commanding such high rates, ...the US is now the world's #3 oil producer...."
Another problem that might develop: if Americans expect to pay $60/barrel for oil, domestic producers will sell it abroad for $100/barrel. The demand in Asia will keep prices high regardless of domestic supplies. It's not such a bad thing. Though lefties exaggerate the human causes, global warming is happening, and petroleum is ultimately a non-renewable resource anyway. Oil will get more expensive, and the market will bring about alternatives. Cars will get smaller, and trains will handle more freight. The demise of SUVs and F-350s (plummeting resale values) will be one benefit. Aside of the rudeness of taking a "commanding" view at the expense of others (like using a booster-seat at the movies), these strap-on male secondary sexual characteristics (brawniness) just add to the caricaturization of masculinity in Western society. Keeping real men preoccupied with toy trucks and vicarious thrills from spectator sports diverts all that testosterone away from the things that men do best--building a strong civilization, innovating, and kicking some intellectual butt.
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