Part of the reason for the increased price of gas is because Congress, in its infinite wisdom, decided to mandate the addition of ethanol to gasoline. Now domestically produced ethanol is pretty expensive and its supply is limited – we are currently using 22 percent of US farmland to make up 4 percent of the gas in our tanks. A few weeks back, a gallon of ethanol was more expensive than a gallon of gas even in Nebraska. As it happens, other countries, notably Brazil, can produce ethanol much more affordably from sugar cane. It’d make sense to relax tariff barriers to import this, right? Sens. Feinstein and Kyl think so and are introducing a bill that would remove the 54 cents a gallon tariff.
Ah, but the crunchy-sounding Renewable Fuels Association, the ethanol lobby group, doesn’t like this intrusion onto its territory, so they’re opposing the bill. As my colleague Tim Carney recently wrote:
So let’s see if we have this straight. Ethanol is good, and so we subsidize it. Except foreign ethanol is bad and so we keep it out. Except some foreign ethanol plants use U.S.-made parts, and so we subsidize them. There doesn’t seem to be much consistency in these arguments, at first glance, but alas there is. All of these actions–subsidizing U.S. ethanol, keeping out foreign ethanol, subsidizing foreign ethanol–involve increasing our federal government’s intrusion into the economy…
On the one hand it’s all so complex: ethanol is good, bad, and good again. On the other hand, it’s all very simple: Uncle Sam rips you off to help the favored classes.