A Detroit perspective on the ongoing Planet Gore “Is ethanol viable?” debate:

To determine whether (corn or sugar or cellulosic) ethanol is a competitive fuel, one only need listen to its advocates to learn that it is not. At the Detroit Auto Show last month, GM made a dramatic announcement that it was investing in Coskata (a Chicago firm backed by green venture capitalist Vinod Khosla) which claims it can produce affordable cellulosic ethanol.

But Coskata Marketing V.P. Wes Bolsen admits that the company needs, not only the current 51-cent per gallon subsidy afforded corn ethanol – but also a federal mandate that gas stations build ethanol pumps (property rights anyone?) – in order to be viable.

That hardly describes a competitive product.

Even GM CEO Rick Wagoner admits his investment’s market shortcomings when he says: “It’s time for the U.S. government to do it (ethanol) through regulation.”

Indeed, talk with Bolsen and other ethanol advocates and they don’t sound like capitalists at all, but rather characters right out of socialist central casting.

“The government has to do this because the oil companies won’t do it as long as they are making record profits,” said Bolsen in an interview after GM’s press conference. “Oil companies are going to try and stop progress until somebody forces them to do it.”

Ethanol advocates make no secret of their admiration for the 1970’s Brazilian dictatorship that nationalized the country’s oil industry, mandated ethanol production, flex-fuel cars, and ordered other central-planning means in order to convert the country from imported oil. Even then, the country had to endure years of unintended consequences, runway inflation, etc. before sugar ethanol became competitive.

And “competitive” is a relative term. Just mandating flex-fuel vehicles is not enough because, given the choice, no one will use ethanol as it only goes 70 percent as far as a gallon of gas. So Brazil taxes it much less than gasoline, and even bans diesel fuel to ensure its market foothold.

My friend Cliff May, like John McCain, makes a national security case for ethanol. That is, they argue we are at war. And what they are suggesting is a wartime economy (at least for energy): That the U.S. government take over the fuel market, effectively eliminate outside competition, and impose the fuel they want.

That – not competitiveness – is the honest argument for ethanol.