In a twin attack Thursday, U.S. Sen. Tom Harkin said he doubts the Bush administration’s commitment to investigating high gas prices and rejected suggestions ethanol supply problems are partially to blame.
And this is from a Fort Wayne, Indiana newspaper:
As a gift to the ethanol lobby, Congress last summer mandated a near doubling in the use of ethanol in gasoline by 2012, to 7.5 billion gallons a year from today's 4 billion gallons.
Ethanol is an oxygenate that reduces pollution (though gas refiners insist they have figured out a way to cut pollution without it.) Congress required more ethanol use at a time when the country is moving away from the only other oxygenate on the market, MTBE, because it has been found to contaminate ground water.
So ethanol producers are scrambling to meet demand and as a result, the price of ethanol has shot up. It's now selling for more than $2.80 a gallon (around $118 a barrel). That's up from a low of $1.35 last summer and a four-year average price of around $1.70. The ethanol mandate has caused price spikes above $4 a gallon and spot shortages at places on the East Coast.
The prices would no doubt be much higher if the federal government didn't provide a whopping 51 cents per gallon tax credit for ethanol producers. Illinois also provides a state sales tax discount that amounts to three or four cents a gallon. And did we mention the high tariffs on ethanol imports that protect the domestic industry from competition?
Gasohol, which includes 10 percent ethanol, is common in the Midwest. The cornfields it comes from are close by and, over the years, an extensive infrastructure to blend it into gasoline has been developed. But there's no comparable infrastructure in other parts of the country; one must be developed. That also adds to the expense - and the price of gas.
Perhaps that added expense would be worthwhile if ethanol substantially reduced oil consumption. But some studies have found that the production of ethanol consumes more energy than the final product saves.
Wait, there's more. You think gas prices are high now? If Illinois pols have their way, ethanol will be the alternative fuel of the future. E85, a blend that is 85 percent ethanol, is on sale at more than 100 stations.
And then factor in this from the Mason City Globe Gazette:
Iowa has one of the largest government fleets that use E85 — an 85 percent ethanol, 15 percent gasoline blend. The state has more than 650 flex-fuel vehicles, which can run on the ethanol blend or regular gasoline.
More people are buying flex-fuel vehicles that are able to use E85 ethanol.
“Having that technology out there and available gives consumers the choice,” Hartwig said, adding that the extra cost is negligible.
He said Ford Motor Co. will boost U.S. production of flex-fuel vehicles by a quarter of a million this year, while General Motors Corp. will manufacture a half million more. He expects Toyota Motor Corp. to offer a flex-fuel vehicle in 2008. While those vehicles would account for just a small slice of the 230 million vehicles on the road, it shows a growing interest in the technology, he said.
U.S. Sen. Tom Harkin, a Democrat from Iowa — the largest ethanol producer in the country — has proposed a bill that would require all vehicles in the United States to have flex-fuel engines within a decade.
So..... there's a shortage of ethanol because groundwater-polluting MTBE, which was forced on consumers by environmentalist liars, is being phased out because Congress wouldn't exempt companies that use it from liability and the replacement (ethanol) costs more money, is difficult to transport, and is in short supply.
Meanwhile, every politician in Iowa is going on blindly about E-85 vehicles and flex-fuel engines while the price of ethanol, which on a gallon-for-gallon basis with gasoline has about 30% less mileage, has doubled in price in the past year and is now almost as costly as pure gasoline. And we don't have the capability to produce enough ethanol to meet demand. And we can't realistically import ethanol (yet) because of the duties imposed to protect American farmers.
What a clusterfuck!
Naturally, we have Tom Harkin giving his two cents. Here's a guy whose lifestyle was paid for from 1997 to 2005 by his lawyer wife, Ruth (now on the Iowa Board of Regents), who used to be a director at Conoco.
And we've got fauxscal conservative Chuck Grassley rambling on about possibly imposing the old "windfall profits" tax on oil companies, as if that is going to give all those $35,000 Dodge Ram Quad Cab drivers some relief.
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