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Monday, May 18, 2009

Ethanol: what's not to hate?

Ed Wallace at Business Week lays out the case against the current lobbying efforts to increase the proportion of ethanol in American gasoline:
For the fourth time in our history the ethanol industry has come undone and is quickly failing nationally. Of course it's one thing when Detroit collapsed with the economy; after all, that is a truly free-market enterprise and the economy hasn't been good. But the fact that the ethanol industry is going bankrupt, when the only reason we use this additive is a massive government mandate, is outrageous at best.

Then again, the ethanol lobby and refiners have a solution to ethanol's failure in America: Hire retired General Wesley Clark as your point man and lobby the government to increase the amount of ethanol in our fuel to 15%. The problems with that proposition are real—unlike ethanol's benefits.
He lists four problems:
  • Ethanol creates more smog
  • Ethanol is a net energy loser
  • Ethanol reduces gasoline efficiency — E85 (85% ethanol) reduces efficiency by up to 40%.
  • Ethanol has pushed up fuel prices worldwide
But, as Wallace drily notes, “It gets better.”

As delivered, the E85 blend also cause damage to cars, even those designed to run E85. For example:
Lexus ordered a massive recall of certain 2006 to 2008 models, including the GS Series, IS and LS sedans. According to the recall notice, the problem is that "Ethanol fuels with low moisture content will corrode the internal surface of the fuel rails." In layman's terms, ethanol causes pinpoint leaks in the fuel system; when leaking fuel catches your engine on fire, that's an exciting way to have your insurance company buy your Lexus. Using ethanol will cost Toyota (TM) untold millions.
As he concludes:
The entire politically stated purpose of using ethanol had already been proven to be a false one before the program even got fully under way.

No surprise there. The premise that ethanol could give America the freedom to one day stop importing oil has always been fraudulent.

Sadly, when a truly bad idea is exposed today, Washington's answer is to double-down on the bet, mandate more of the same, and make the problem worse.

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