Expensive, wasteful ethanol can’t solve our problems

In his State of the Union address on Tuesday, President Bush spoke a lot about energy independence and alternative energy sources like ethanol. According to the president, ethanol is the magical elixir that will solve virtually every economic, environmental and foreign policy problem on the horizon. In reality, it’s enormously expensive and wasteful.

Lie No. 1: Ethanol will lead to energy independence. If all the corn produced in America last year were dedicated to ethanol production (and only 14.3 percent of it was), U.S. gasoline consumption would drop by only 12 percent. For corn ethanol to displace gasoline in this country, we would need to appropriate all cropland, turn it over to corn-ethanol production, and then find 20 percent more land on top of that for cultivation. The U.S. Energy Information Administration believes that the practical limit for domestic ethanol production is about 700,000 barrels a day — a figure they don’t think is realistic until 2030.

Lie No. 2: Ethanol is economically competitive now. According to a 2005 report by the U.S. Agriculture Department, corn ethanol costs an average of $2.53 to produce, or several times what it costs to produce a gallon of gasoline. Without the subsidies, costs would be higher still.

Lie No. 3: Ethanol reduces gasoline prices. If you lived in urban areas that used reformulated gasoline last summer — that’s the environmentally “clean” gasoline required for areas with air pollution problems — you might have paid up to 60 cents a gallon more for gasoline than you would have otherwise. That’s because the federal government required oil refineries to use 4 billion gallons of ethanol in 2006 regardless of price.

Chicago Sun-Times