Ethanol too costly to cure oil addiction

Ethanol, touted in President George W. Bush’s State of the Union speech as a partial cure for America’s oil addiction, is the product of another pernicious habit: subsidizing farmers.

From the beginning, use of ethanol has been sold as a way to lessen the U.S. dependence on foreign oil, which as Bush said in the Jan. 31 speech, is “often imported from unstable parts of the world.”

In reality, it is a way to boost corn farmers’ income, along with that of the industries that supply farmers with machinery, fertilizer and other goods and services.

Even with today’s high oil prices, ethanol is too costly to produce to compete with gasoline. To make it viable, the federal government provides a subsidy of 51 cents a gallon when it’s mixed with gasoline and sold as motor fuel.

In addition, it takes a lot of energy to grow and transport the corn, the main ingredient of ethanol, and to turn it into a liquid fuel. The latest studies indicate the process consumes about 80 percent as much energy as it produces, though that figure depends on a variety of assumptions such as corn yields and the location of ethanol plants relative to the corn fields.

Bloomberg