With all the talk on biofuels like ethanol, it is often lost in the hype of the media whether this is a sound move or another government forced failure. I see a huge negative impact on our economy from this, but it isn't discussed much on the main stream mediums.

Ethanol is a biolfuel produced from corn. The Federal government has regulated that so much biofuel has to go into regular gasoline. Currently it is set at 5.9% of the total make of gasoline. The problem I see here is that it costs a lot more to produce ethanol than it does to produce regular gas. This has causes huge sums of corporate welfare to go out to farmers because they can't produce cheap enough. This leaves tax payers footing the bill to pay for something that does absolute nothing to the cost of gas. In fact, it's very difficult for farmers to even come up with the supply to meet the demand of gas, so it is in fact bringing the price up.

There is also another side effect to the ethanol and that is the supply of other grown foods. Since it's profitable and you'll get a big government check no matter what, farmers are moving into growing corn. This means other foods are not being grown. The demand for this food is the same, but the supply is going down. This leaves us with higher prices on basic things like corn(for eating), rice, wheat, etc. But it doesn't stop there. Flour, which is made from wheat is in a lot of other foods you buy at the store. It's in our bread, in our pasta, in most things and the price keeps going up. There are people in South East Asia that are starving now because they can't afford to buy rice.

As much as I disagree with environmentalists, they all agree 5.9% ethanol in gasoline will not solve global warming. We'll never have enough ethanol available to put in gas to stop global warming. Why do we do it than? There's no point. All it does is drive prices up, make us pay more in taxes and get absolutely no benefit.

What's the point? I don't know, but it sure doesn't benefit the economy or the people in it.

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Posted by Christopher | 12:46 PM | | 0 comments »


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