McCain Free Trade and Ethanol
Ethanol provides an interesting lesson in government subsidies, why they cause problems and why free trade works better. It’s understandable how in the late ’70’s ethanol subsidies started. There was an interest in finding energy alternatives, and the idea of corn based ethanol held promise. Today there is still a desire to find clean energy alternatives, and ethanol still holds promise. Yet these subsidies, even if well intentioned, create more problems than they resolve. Problem number one, subsidizing corn based ethanol creates an obvious focus on corn. However, the promise ethanol now lays in numerous sources such as switch grass, sugar, or a host of other natural products. Pushing corn slows the development of ethanol from these alternate sources. Second, subsidizing corn ethanol creates an unnatural shortage of corn. Hence food prices rise; not only corn based products, but the cost to feed farm animals increases making the price of meat and dairy products increase too. The working class and those already struggling financially are hurt the most as the price of necessities increase.
Finally, the last problem with ethanol subsidies is they are hard to illiminate. Senator McCain made a very gutsy decision to be the only candidate to go into the Iowa primary stating that he opposed ethanol subsidies. Telling farmers that it is no longer good economics to regulate and subsidize corn ethanol is hard, but necessary. Eliminating these subsidies will help with food prices. It will help allow other sources of ethanol to develop, and will even allow the US to purchase cheaper ethanol from other countries such as Brazil who has plenty. Regulation and subsidies are often well intended, but as is the case with ethanol, problems often arise when free trade isn’t practiced.
Also posted at McCain Independents
Tags: energy alternatives, ethanol subsidies, free trade ethanol, free trade subsidies, government regulations, government subsidies, mccain economics, mccain energy, mccain ethanol, mccain free trade, pro free trade
May 16, 2008 at 10:31 am
Biofuels in general, at best are only slightly energy positive. If you include all the costs to grow the crop, fertilize, harvest, process and distribute some studies show they are negative. But the best case estimate is a 25% net gain in energy. Thus, you expend 80 units of energy to add 20 units. Then you look at the fact that ethanol gives lower MPG than gasoline.
Add it all up, and you find we do not have enough crop lands to provide our fuel for driving. There is no biofuel path out. It can provide a small percentage of driving fuel needs.
May 16, 2008 at 7:27 pm
Mr. McCain, Why don’t you address the oil shortage and high prices this way. Newt Gingrich has sent a letter that gave several things we Republicans must do so that everyone will know we mean to start a new way of doing business.
Why don’t you say that with help of the Congress you are going to drill in Alaska and start immediately building ten new refinerys, so that we could have our oil and we could have it for a much lower price. We could sell it much cheaper and pay off the debt that is so astronomical, and we could
do so much better than we are doing now.
We wouldn’t bother Exxon and the other big oil companies, let them continue on.
May 17, 2008 at 5:36 am
I believe the upcoming election will be more about food prices and bad policy like the ethanol support than ANYTHING ELSE. iF jOHN mCcAIN WOULD REMOVE ALL MANDATES FOR BIOFUELS i WOULD VOTE for him. To truly gain energy independence we must turn our coal reserves into liquid fuel. We could totally replace ALL imported oil for one hundred years if we would simply do this.