If ethanol has commercial merit, it doesn't need subsidy

Misconceptions about Ethanol:

Ethanol will lead to energy independence. If all the corn produced in America last year were dedicated to ethanol production (14.3 percent of it was), U.S. gasoline consumption would drop by 12 percent. The U.S. Energy Information Administration (EIA) believes that the practical limit for domestic production is about 700,000 barrels per day by 2030. (about 6 percent of U.S. gas, not total energy demand in 2030).

Ethanol is economically competitive now. According to a 2005 report issued by the Agriculture Department, corn ethanol costs an average of $2.53 to produce, or several times what it costs to produce a gallon of gasoline. Subsidies amount to 42% to 55% of ethanol's wholesale market price.

Ethanol reduces gasoline prices. California and other areas that used reformulated gasoline paid up to 60 cents a gallon more because the federal government required oil refineries to use 4 billion gallons of ethanol in 2006 regardless of price.

Ethanol is a renewable fuel. According to Science magazine last year, 5 percent to 26 percent of the energy content of ethanol is "renewable." The balance of ethanol's energy actually comes from the staggering amount of coal, natural gas and nuclear power necessary to produce corn and process it into ethanol.

Ethanol reduces air pollution. Australian academic Robert Niven found that, when evaporative emissions are taken into account, E10 (fuel that's 10 percent ethanol and 90 percent gasoline, the standard mix) increases emissions of total hydrocarbons, nonmethane organic compounds, and air toxics compared to conventional gasoline.

Ethanol reduces greenhouse gas emissions. E10 reduces greenhouse gas emissions from zero to 5 percent; pure ethanol by 12 percent. Ethanol as an anti-warming policy is what academics refer to as "crazy talk."

Ethanol subsidies are necessary to "level the playing field." Petroleum subsidies are something less than $1 billion a year – six to eight times less than ethanol subsidies – and work out to about 0.3 cents per gallon.

Switchgrass (aka, "cellulosic ethanol") will set us free. The head of the EIA, noted in a speech last December that the capital costs associated with cellulosic ethanol production were five times greater than those associated with conventional corn ethanol production. Betting the farm on an industry that doesn't yet exist to produce a product that is known to be staggeringly expensive isn't the best use of tax dollars.

This information available at www.Cato.org: “Ethanol Makes Gasoline Costlier, Dirtier”