Ethanol: Corporate Welfare for Farmers

A large part of the political support for ethanol--for mixing requirements, CAFE credits, and outright subsidies--is old fashioned "special interest" pandering, nest feathering, corporate welfare.

One aspect of this farmer protection program is the import tariff on ethanol. Currently, ethanol imports are taxed at a whopping $0.54/gal (per gallon!). The effect of this is to protect the domestic ethanol producers, and to keep ethanol expensive. But it isn't the "family farm" that is being protected--the big winners are the huge producers of ethanol, corn, and seed--companies like Monsanto and Archer Daniels Midland.

This doesn't make much sense for the bigger picture. Ethanol derived from corn and soybeans is much less energy efficient than ethanol derived from sugarcane, according to a Wall Street Journal article I just read. Corn has an ethanol energy factor of 1.3 (1.3 BTU's out for every BTU it took to produce), while sugarcane has an efficiency of a whopping 8.

If our priorities are to reduce our use of oil, we should be working on getting the cheapest ethanol possible. I guess we'll find out what the priorities of the New Democrat Congress are soon enough--pork, or oil?