Saturday, November 28, 2009

Green Madness & Government Intervention

The ill-advised ethanol saga continues.

Government mandates and subsidies for ehtanol were a massive boondoggle from the start. As I've blogged many times, it harms - not helps - the environment and moves large-scale production of agriculture from food to fuel, raising world food prices significantly - a World Bank estimate puts the increase at 75% - at a time when demand is increasing and production is decreasing (ironically driven by increasingly cold temperatures). Hot Air covers the latest in the saga.

The government mandates and subsidies have now led to a glut of ethanol, with the Obama EPA considering upping the blending requirements from 10% ethanol to 20% or more to take care of all the profiteers who, enticed by the government, have invested heavilly in expanding ethanol production. Think of it as the agricultural equivalent of doubling down on the AIG bailout - a bad idea set now to get exponentially worse. This will only further depress food production and raise food prices concomitantly. But in an added twist, requiring a higher ethanol mix threatens the integrity of our car engines. The only things not mentioned by the Hot Air authors are that increasing the ethanol mix in gasoline also lowers fuel economy (E20 lowers it by 7.7% over pure gasoline) and has a very adverse effect on small non-road engines.

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