The Campaign Spot

Is Obama Telling Oil Companies They Have To Change Industries?

An item in Obama’s energy speech in Detroit today:

Beginning in 2010, we will require petroleum makers to reduce the carbon content of their fuel mix one percent per year by selling more clean, alternative fuels in its place.

If you’re a petroleum maker… would the “petroleum makers” in question be the oil company that extracts and transports the crude oil? Or the refinery? It sounds like the refineries. So if you’re a regular oil-only refiner, a President Obama would pretty much require you to get into the ethanol/switchgrass/what-have-you business, whether you liked it or not. And year by year, more and more of your business would have to be in these alternative fuels by regulatory fiat – no matter what the cost was of ethanol, switchgrass, sugar cane, whatever.
Right now, ethanol is 29 cents a gallon more expensive than regular unleaded gasoline in Nebraska, thanks to the handy and detailed charts found here
By the way, we’ve already seen not-insignificant hikes in food prices due to increasing demand for corn for ethanol. Mexico is experiencing a tortilla crisis – I’m not making that up. I don’t say this to completely deride investment in alternative fuels like ethanol, just to point out that there are always unexpected side effects of policy proposals. I wonder if Obama is okay with the poor paying more for food because of his energy proposals?

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