  | | Ethanol Politics | 08/07/2008 06:03:07 pm by Dan Krohn | |  |
| Today the Houston Business Journal ,in one of its daily emails, carried a story concerning the EPA's rejecting a request from Texas Governor Perry to reduce the federal ethanol mandate in Texas by one-half. The article goes on to quote a number of people criticizing the federal program's diversion of corn from food to fuel. Well, this is old style farm state politics at its best (or should we say worst). But the worst part of the story is not the ruling on Gov. Perry's request.
The United States seems to have taken a clear position preferring petroleum imports from the Middle East to ethanol imports from Brazil. There is no import tariff on the imported oil, but there is a high import tariff on Brazilian ethanol (which is largely produced from sugar cane which is far more efficient and cheaper than corn based ethanol). Brazil is so annoyed by this tariff that it is threatening to file an action against the U.S. with the World Trade Organization.
But look at the number of representatives and especially senators from corn growing states and all becomes clear. Yes, the use of corn for ethanol is a factor in keeping both U.S. food and fuel prices high. Yes, removing the tariff on cheaper Brazilian ethanol might reduce fuel and food prices. Yes, the U.S. maintains that it favors free trade in the international market (and often files WTO actions against other nations which it believes impose unfair restrictions on U.S. imports to their countries). But NO, old style politics means that the U.S. will support expensive oil imports and prevent less expensive ethanol imports because (1) the farm lobby likes the windfall, and (2) the Bush administration loves the oil industry and does whatever it can to assist it to profit.
In all fairness, this blogger lives in Texas and benefits from good times in the oil industry, so perhaps I should like this policy. But you might not. | | |
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