Re Re Oil Prices

by Clifford D. May

Iain – Yes, anyone can buy a Flex-fuel Vehicle (FFV) and, in fact, many people have them and don’t even know it. It is cheap and easy to make cars that can utilize multiple fuels rather than cars that can drink only gasoline.


It will require a significant number of FFVs on the road before service station owners are ready to install “blender pumps” that offer alternative fuels (or, more precisely, offer gasoline/alcohol mixtures). That, in turn, can incentivize farmers both at home and abroad to produce more alcohol fuels.


Of course, right now ethanol from South America carries a whopping tariff of 54 cents per gallon. By contrast, oil from Venezuela carries a tariff of 0 cents per gallon. I think it’s time to level the playing field (by getting rid of the tariff, not by adding new ones).


And yes, it’s true that we get most of our oil from Canada and Mexico but oil is a fungible commodity. Oil from the Gulf – on which our European allies depend -funds al-Qaeda, the Taliban, Hezbollah and similar terrorist groups.


Oil is dominant in the market not as a result of competition but because once upon a time America was the world’s leading oil producer. That helped us win World War II (the Germans and the Japanese were both desperate for gasoline –a major cause for their defeat and a cautionary tale). But those days are long gone.


More energy supply and more energy diversity would provide a multitude of benefits. And more production of various fuels at home and by our friends (rather than by regimes hostile to us) would be healthy for  the U.S. economy.

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