Anne Korin from the Institute for the Analysis of Global Security responds to Henry Payne’s post below:

Henry Payne’s assertion that I “like ethanol” is a bit improved from his previous assertion that I favor policies that “favor ethanol” but is still off the mark.
I favor competition and choice in the transportation fuel sector — liquid fuel choice, electricity as fuel, you name it — as a means to strip oil of its status as a strategic commodity (much in the same way that, in a prior era, electricity and refrigeration stripped salt of its strategic value and power to impact world affairs and the fates of nations.)
I do not favor a particular fuel. Policywise, I favor an Open Fuel Standard — meaning all new gasoline cars sold in the US should be flex fuel vehicles. Methanol is the most corrosive of alcohols used for transportation, so an FFV that can run on methanol (in addition to gasoline and ethanol) can also run on a variety of other fuels, from P-Series to butanol, made from a variety of sources, including coal and biomass. This feature costs under $100 per car, and provides a platform on which a host of fuels can compete to power our transportation sector.
I favor removal of tariffs such as the 54-cent per gallon tax on ethanol imports (no such tax exists for oil) that inhibit an open and competitive transportation fuel market.
Henry Payne’s comments about various lobbies in various countries pushing for preferential taxation structures for their particular fuel ignore the point of what fuel taxes are used for and the principal of how tax burden should be allocated.
Does Henry Payne believe that goods should be paid for by the people using them?
In the case of a good funded by the use of taxes, does he agree that the tax burden should be allocated according to usage? (With the exception of such public goods for which this accounting is impossible and/or nonsensical, such as defense or the justice system.)
Does he agree that the fairest way to allocate the cost of highways would be through strict tolling?
Does he recognize that in the U.S., fuel taxes – minus a tithe for political pork — are used to fund highways? Does he agree that therefore, in the U.S., the fuel tax burden should be allocated to taxpayers according to usage of the good being paid for by the tax, namely highways? That is, that fuel taxes should serve as a surrogate for per mile tolling?
If the answer to all of the above is yes, I do not understand why Henry Payne would think that a volume-based fuel tax is a more fair and less market-distorting surrogate for per-mile usage charges than a BTU-based fuel tax that takes into account the fact that one can drive different distances depending on which gallon of fuel is used. Just because that’s the way we do it now is not a good enough answer.