SubscribeThe recent high energy prices have given ethanol a new lease in life. In the last week, I’ve read at least two articles on Ethanol (Fortune and The Economist, I believe, but my memory is on the fuzzy this). I’m curious to see what the Dubya will have to say on the matter in his State of the Union as it’s widely expected that he’ll be giving ethanol a plug. Of course we should’ve already had better energy policies that would actually promote alternative energy sources. Last year’s ethanol mandate was a start, but I really do think the country had better energy policies in the 70s than we do now. I know Dubya talked about Hydrogen Fuel Cells a couple years back which always seemed like a hokey idea since the cheapest way to getting hydrogen was extracting it from fossil fuels like oil. It never seemed like a solution unless one was comfortable with the idea of using nuclear power to extract hydrogen from water. Personally, I could be comfortable with the latter. But the overall attitude toward nuclear power make fuel cells an interesting but hardly a viable alternative to fossil fuels. The Govt shouldn’t just react to situations, but have policies designed to anticipate or at least prepare the country for different situations. Given the political instability in the middle-east, the growing economies of China, and India, it should come as no surprise that oil prices have risen as they have.
Getting back to ethanol. I don’t think ethanol by itself is going to lead us to energy independence. Ethanol in the US is generally derived from corn where as sugar cane, and sugar beets are actually better sources. From what I understand it takes nearly as much energy to make corn ethanol as the stuff produces. I’d hate to see another farm subsidy disguised as energy policy. The US can start by eliminating the tarriff on imported ethanol. A cheaper supply will feed growing demand which in turn can drive technology.
On another note, good energy policy should promote conservation, and energy diversity. I don’t understand why some on the right think of conservation as a dirty word. Consumer conservation at it’s heart might just be price discrimination. I buy oil at $20 a barrel, at $50 barrel, I don’t. Policy should allow for choice. If the Govt had polices in place that strongly incentivized car makers to make more efficient cars, GM and Ford may have actually developed Hybrids instead of Toyota. Of course the argument against is that the free market will sort these issues out, and GM and Ford were dumb car makers. A very credible belief. A private company’s interest in short term profits often can get the better of them. SUVs are profitable and partially out of a Govt. loophole that exempted these “trucks” from car standards. Is it really that much of suprise that car companies spent their time and energy developing bigger and better gaz guzzling SUVs?