Click here to listen to the broadcast of You Tell Me on Newstalk 600 KTBB, Friday, May 5, 2008.
It’s costing a fortune to fill up my car. I hate it. I’m sure you hate it. I also hate that we remain, 35 years after the Arab oil embargo, more dependent on oil from foreign sources than we were when we first experienced gasoline lines.
I appreciate the urge on the part of the government to “do something.” How can today’s politicians not have that urge? We are a nation of people who expect government to “do something” whenever there is a problem, no matter how personal the problem (like borrowing too much money for a house) and no matter how frequently we see that the “something” that is done is usually much worse than the problem itself.
Oil prices were on the rise in 2005. The Bush administration’s efforts to increase American production of oil by drilling in the Alaska National Wildlife Refuge (AKA: ANWR) and the Outer Continental Shelf died in Congress.
What didn’t die was the Energy Policy Act of 2005. The original bill contained a provision permitting the drilling of ANWR. By the time the bill became law, that provision was gone. What survived was the provision mandating that ethanol be mixed with gasoline such that an ever-increasing percentage of total gasoline sold in America contains ethanol.
George Bush, I love you. I’ve defended you in the midst of withering criticism. But you continue to stand behind the ethanol farce and that is indefensible. It’s bad policy and it’s causing bad problems.
Whenever you pass laws that serve to intervene in free markets, you almost always confront an additional law: the law of unintended consequences.
Ethanol is so costly that it can’t make it in the free market. That’s why it was necessary to pass a law mandating its use. That’s why it has been necessary to subsidize its production by paying farmers (with your tax money) to grow corn instead of other commodity crops.
It takes 400 pounds of corn, the average direct and indirect corn consumption of an adult for an entire year, to produce enough fuel to fill up your tank once.
Corn has to be grown, fertilized, harvested and trucked to processing plants. All of that burns fuel. It takes more than a gallon of fossil fuel to produce a gallon of ethanol. You heard that right. Ethanol uses more energy than it yields.
And it takes an astonishing 1,700 gallons of water to produce a single gallon of ethanol.
Ethanol is a bad deal. Ethanol is doing nothing to reduce our oil dependence. And that would be bad enough. But it doesn’t stop there. The ill-advised government ethanol mandate is causing serious problems elsewhere.
Have you looked at your grocery bill? How could you not? Yes, there are lots of factors contributing to rising food prices. But one of the biggest is ethanol production.
The Energy Policy Act of 2005 mandates 7.5 billion gallons of ethanol production this year. This has required the diversion of over a third of the American corn harvest out of food production and into producing fuel.
Everything down the line that relies on corn has been clobbered. This includes the obvious like breakfast cereal but also the less obvious, like animal feed and corn sweetener for a whole list of packaged foods. The sudden demand for corn affected all other grain crops, as fields that once produced wheat and soybeans were diverted to growing corn. All at once, the price for bread, meat, eggs, milk – pretty much everything in your fridge – jumped way up.
Domestic food prices have risen by over 46 percent this year. Around the world, there have been food riots in Egypt, Cameroon, Indonesia, Asia and as close to home as Mexico. People who can’t afford to buy food can get pretty nasty. I wonder how that fence on the Mexican border is coming.
Fuel prices are a problem. The mortgage meltdown is a problem. Tight credit is a problem. The very real chance of recession is a problem.
We have enough problems. So we shouldn’t voluntarily make more problems. It’s time to admit that the ethanol mandates were a bad idea and stop this lunacy before things get much worse.
Here is part of the problem and some of the solution. The reason, in part, that politicians in Washington ignore the impact the fuel problem is having on the average, and for that matter non-average, American is because it doesn’t affect them. Politicians are driven from home to office, office to meetings and office to home by tax payer drivers in tax payer paid vehicles with gasoline provided by tax payer dollars. Politicians, at least those in DC, rarely get out of the car and fill up a gas tank. Politicians are by their nature, poor financial planners. The presume the tax dollars we pay are theirs to do as they please all the while forgetting that it is the tax payers taxes that pay their salaries, provide their offices and furnishings, provide their life long health care at no cost, and provide their life long annuities. And even though they are employed by us, we virtually have no ability to fire them for not living up to any of the promises they made that got them into their offices in the first place.
Ethanol is a typical example of a completely blundered governmental program that was promoted, supported and placed into law without proper analysis. No different than the bridge to no where. This “solve” by our government has now pushed basic food needs to levels never seen in the history of our nation and what are these politicians doing about it….absolutely nothing. They should be given 6 months to fix the problem they caused or they should be fired from their jobs and loose all of their perks.
There is more oil in this country and off its coastal boarders to supply this country for millennium’s to come. These same politicians should be forced to enact law setting aside the ridiculous environmental laws that make producing and refining oil impossible and cost-prohibitive by private enterprise and US producers and refiners should be given proper tax incentives for production and refinement of oil IF, and only if, that oil is kept within the boundaries of the US for homeland consumption. For every barrel of oil produced here in the US that stays here in the US, we should cut imports of oil from foreign non-friendly countries. Additionally, the oil produced by one of the most oil-rich nations in the world, Iraq, should be shipped to the US for free until the cost of liberating that country is recouped. Again, if our employees in Washington can not accomplish this, they should be fired from their positions and replaced with business people who know how to accomplish tasks set for them.
This same set-aside of the existing environmental laws and tax benefits should take place regarding the construction of nuclear safe power plants to supplement fuel needs for this nation.
Finally, the Wall Street trading of oil commodities that is artificially increasing the cost of oil to consumers needs to be stopped immediately. What is transpiring on Wall Street is nothing short of treason and fraud and further exploitation of this commodity should be dealt with harshly.
Politicians have proven in the past and they continue to prove today that they are not, generally speaking, in office for their constituents. They are in office to stay in office and to not make waves. They MUST make waves and failing to do so in a prescribed period of time should result in their dismissal, no different that any other corporate American position.
The only thing I have seen Oil be successful in, relating to these efforts, is bioheat. Many oil heat users have made the switch to the B5 blend of oil and have been happier since. It consists of regular oil mixed in with biodiesel (corn oil, soybean, etc.). It produces no greenhouse gases, costs about the same as regular oil, and it helps save about 400 Million gallons of regular heating oil. Can you believe that. If you can’t I have proof.
Here: http://oilheatamerica.com/index.mv?screen=bioheat
Working for NORA I have been able to look into heating alternatives, and so far, this one of the most reasonably priced options. Check it out, let me know what you think.
Mr. Gleiser,
Thank you for this article. Many of us get so bogged down in our everyday lives that we tend not to pay attention to what the government is doing….and that is never a good thing. Much of this I was not very knowledgeable about until now. I will pass this article on to everyone I know.
Wonderful education on ethanol!! Fuel and energy is best left to the free market, not Government mandates (born out of ignorance) that are almost impossible to correct if they go bad. This is really a bad one that has resulted in price increases in two of our most important basic needs, food and transportation.
State and Federal government takes $0.47 ($0.286/state avg. and $0.184 federal) in excise taxes per gallon of gasoline and the NET profit (after taxes) of Exxon is $0.07 per gallon of gasoline. Why are some in Congress so critical of Exxon profits? What happened to the free enterprise system? How can the government make more money off of a basic commodity than the company producing it?
Who is gouging who? Food in Texas has no sales tax. Why is gasoline taxed at all? Both food and basic transportation are necessary for life as we know it. God help us all if the increase in government “profits” continues.
Is involuntary servitude not far behind, not to mention outright slavery to the all powerful Government if we don’t wake up our sleepy Representatives?
Can more than one comment be submitted per article?
Thanks for posting my comments on May 2. I forgot to complement you on the clever picture of the delicious ear of corn sticking out of the gas tank!
You might want to check out the question and answer dialog at the following link:
http://answers.yahoo.com/question/index;_ylt=Aoe9N_DPik525akylY3wYwHsy6IX;_ylv=3?qid=20080501001355AAkWOYk
Thanks for posting my comments on May 2. I forgot to complement you on the clever picture of the delicious ear of corn sticking out of the gas tank!