Ethanol

Ethanol may be a good idea. And it may not be.
Ethanol

Ethanol may be a good idea. And it may not be.

The last place I would look for an intelligent attitude on ethanol is government, state or federal. I read nothing in either the American or the Iowa Constitution suggesting government should have anything at all to do with energy, and our founders got it right.

Let me suggest the free market is the best allocator of goods and services in an economy. When suppliers and consumers of energy meet in a free market, prices and quantities are determined by supply and demand. This arrangement gave America the greatest economy in the history of the world, and it still performs for us on a daily basis.

Most unfortunately, state and national politicians have caved in to special interest lobbies, lobbies that are not working for the common good, but for private gain. By simply eliminating all subsidies and regulations for energy producers (and consumers) of every stripe and style, the marketplace will quickly determine how much ethanol will be produced and what price consumers will have to pay for it. There is no way the government can make that allocation better.

But what about pollution, I hear a voice in the back of the room ask.

You are correct – pollution is an externality producers do not have to take into their financial considerations, because the negative effects land on others.

The correct way to deal with an externality is to either make it easy for the people who are negatively impacted to sue for damages in a civil court, or to tax it. That’s why class action suits are allowed, and that’s why a carbon tax is the most efficient and effective way to reduce carbon emissions. If you don’t believe me, there’s a Nobel Prize winner you can talk to.

Government should never pick winners and losers, it should remain neutral. To do otherwise creates economic distortions that profit a few, but hurt everyone else.

Ethanol is no exception.

2 Responses

  1. I promote the independence and self-sustainability of Iowa. Ethanol contributes to these goals by providing good jobs, stronger supply chains by promoting farm to factory to consumer options, and reduced reliance on interstate and international dependence. By lifting the subsidy, these jobs will decline sending skilled workers after better opportunities often outside of Iowa which deteriorates every facet of rural Iowa communities.

    1. Why is it the government’s job or business to steal my tax dollars, and then hand them over to huge corporations. If the ethanol sector cant attract workers or remain profitable without government intervention, then its not a good fit. Also, let me remind you, that Ethanol is a crappy fuel, it is highly hygroscopic and a strong solvent, meaning that it pulls water from the atmosphere into your tank, and on many older vehicles it can damage the seals and o rings in the fuel system. Washington politicians dont care about this because they dont drive older vehicles or even pay for their transportation.
      ETHANOL SUBSIDIES NEED TO GO!

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