Jan. 24, 2007
Bush's Alternative Fuel Folly
National Review: Ethanol Alone Won't Solve Our Petroleum Problems
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Play CBS Video Video Expert: Energy Policy Flawed The president asked Americans to cut gasoline use by 20 percent in his State of the Union address. Oil industry expert Tom Kloza discusses with Julie Chen how realistic this policy is.
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Video Is U.S. Addicted To Oil? President Bush said the United States is addicted to oil in his State of the Union speech. He also suggested alternative fuel sources, but not everyone agrees. Oil price expert Tom Kloza comments.
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Video Corn As An Alternative Fuel With oil and gas prices on the rise, consumers looked elsewhere to heat their home. As Lee Cowan reports, many turned to kernels of corn as a source of energy, which is saving them a lot of green.
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(CBS/iStockphoto)
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Interactive 2007 State Of The Union President Bush lays out a streamlined agenda to Congress, VIPs, invited guests and the nation.
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Photo Essay State Of The Union Images Congress, VIPs and guests gather in House chamber for President Bush's address.
With a combination of alternative fuel mandates and increased fuel-economy standards, President Bush on Tuesday night urged Congress to "build on the work we have done and reduce gasoline usage in the United States by 20 percent in the next 10 years." Build on the work we have done? With similar policies in place since 1974, American petroleum consumption has increased — not decreased — by over 20 percent.
Only in Europe, where government taxation has driven gas prices to $6 a gallon and dampened economic growth, has oil consumption declined by 15 percent. And that took 30 years, not 10.
Such draconian measures are unlikely in the U.S., meaning no decline in oil consumption — but a continued rise in wasteful, politically correct federal ethanol subsidies.
In a similar political climate in the early 1970s, Congress enacted the regulatory regime known as CAFE (Corporate Average Fuel Economy). Today passenger cars are more efficient than ever — up 114 percent since 1974. But gasoline is so cheap — despite perpetual Middle Eastern crises — that on average, Americans are driving twice as many miles as before. As a result, U.S. oil consumption has increased from 17 million barrels a day in 1976 to 21 million barrels today, and oil imports as a share of U.S. consumption have risen from 35 to 59 percent.
Ironically, the president's call echoes a more severe proposal by his 2004 campaign opponent John Kerry — a recommendation that a National Center for Policy Analysis study found would not "reduce future U.S. dependence on foreign oil."
The president's plan also proposes an expansion of the so-called Renewable Fuels Standard (RFS), which currently mandates that refineries produce 7.5 billion gallons of ethanol per year by 2012. But, as Heritage Foundation energy analyst Ben Lieberman points out, "if ethanol were a viable fuel, you wouldn’t have to mandate it in the first place."
Indeed, ethanol — whether made from corn or trendy cellulosic sources like switchgrass — is simply not viable as an alternative for the fundamental reason that a gallon of ethanol only goes 75 percent as far as a gallon of gas. In its comprehensive 2005 report on biofuels, the World Bank concluded that "the technologies to produce ethanol are well understood. (Thus) major breakthroughs under current processes are not expected."
The RFS exists — not due to market demand — but to satisfy the auto and farm lobbies. For the Big Three, manufacturing "flex-fuel" vehicles (cars that run on gas and ethanol) allows them to exploit a huge loophole in the aforementioned CAFÉ laws. At minimal cost, converting vehicles to flex-fuel allows automakers to skirt the fatuous fuel rules — even though consumers only fill up the vehicles with gas.
For the farm lobby, the renewable mandate is easier to understand. It means money. Lots of money. To make ethanol price-competitive, the federal government subsidizes its production to the tune of 51 cents a gallon, costing U.S. taxpayers $4.1 billion a year. Fueled by the RFS, Big Ethanol producer Archer Daniels Midland rang up record 2006 profits that would make Big Oil blush.
Now Bush is proposing to increase the mandate to a fanciful 35 billion gallons by 2017 (whether consumers buy it or not). And as the federal honey pot grows, it is naturally attracting more flies. Investors like Sun Microsystems founder and Green activist Vinod Khosla want to invest in cellulosic ethanol sources because they are less carbon-intensive to process than corn ethanol (which some studies show burns more energy to produce than it saves as a fuel) — much like sugar-based ethanol, which has captured 40 percent of Brazil's fuel market.
Brazil's experiment has created a buzz among the alternative-fuel set — from liberal pundits like the New York Times' Thomas Friedman to the president's own brother, Jeb.
But like Europe's drastic measures to decrease fuel consumption, Brazil's heavy-handed tactics to impose biofuels have little political future here. Brazil's ethanol conversion occurred over a period of decades as its authoritarian government nationalized energy companies, mandated ethanol-fueled cars, banned diesel fuel — and provided a staggering $1.20 per gallon government tax subsidy. As the World Bank report concluded, Brazil comes closest to commercially viable biofuels, but only as long as it "maintains a large tax differential between gasoline and ethanol."
By Henry Payne
Reprinted with permission from National Review Online.
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Michelle Obama tells how her role as the First Lady has changed her perspective.
America GET out of the Middle East quit selling them weapons, learn how to make Bio-Fuel or Clean-Coal Fuel and let the Middle East drink the oil and eat the sand! They cut the Oil off in the middle Seventies and we still have not gotten independent from Middle East Oil! Media quit covering these people in the Middle East let them blow each other up without our kids seeing it on the news! They still won't quit killing each other we just don't have to watch or make policy because of it. Who in American Media is forcing you to cover this violence in the Middle East? America has paid for the entire Middle East for the last Fifty Years in Lives, Blood and Tax Money and this investment has brought us the Chaos we have today. It is time to try something else! The Middle East has been fighting since the Sons of Abraham, Ishmael and Isaac were born. Americans come home and let the Middle East be Isolated! The entire place is not worth one more American Life or Dollar!
His talk about oil is what it is JUST TALK where do you think the bush family makes their money, what business have the bush family always been in.
OIL OIL OIL OIL OIL OIL OIL OIL OIL
The hydrogen thus produced can be transported to modified BP, Shell, Exxon stations by the existing companies that currently haul gasoline all over the country. The water electrolysis plants can be owned by existing refiners (protecting their existing incomes). The nuc plants can be owned by existing nuc energy companies.
The only ones left out of this process are the oil traders. Big Oil doesn%u2019t have as much influence as you%u2019d like to believe. The commodities traders are the ones holding our economy hostage.
Hydrogen is a viable option. The problem is, no one is going to put the infrastructure in place to deliver hydrogen without hydrogen cars, and the auto makers aren't going to make cars without the infrastructure. I have read that it will take 500 billion for the infrastructure. Too bad Bush and Cheney wanted to play war when we could have spent the 500 billion from Iraq and truly were energy independent.
Oil barons will say if we switched to that as power, all the economies of the world would go broke, but the truth is, only they would. Think about never having a bill to heat your home, drive your car, or power your business %u2013 Imagine the profits you would get, how easy it would be to send ALL your children to College, and how we could all comfortably retire by saving that much money.
Truth is, we%u2019ll not see it as power until certain people create a method of financially controlling such resources, so they will profit from it, tax it, and control it %u2013 %u201CThe power to tax is the power to control%u2026%u201D
Pretty tough to tax something that falls from the sky.
Ethanol will destroy a car%u2019s engine in a day if used without fossil fuel, and a little with fossil fuels will take more time, but it will cause premature engine failure over time.
More attractive are the oil shales around Colorado. Yes it is a fossil fuel but it can be refined cheaply with also a cleaner burning fuel. It takes fossil fuel energy to produce, but there are reasonable solutions to eliminate this pollution source.
It appears to me that the most reasonable solution for transportation is the hydrogen fuel cell technology if the desire is zero pollution. Battery cars, to me, are a hoax because when you plug these in it costs to charge these thing. It is double trouble if the electricity comes from a fossil plant.
Modern agriculture is the process of using land to convert petrochemicals into food.
Switching to ethanol does little to aleviate oil dependency. Instead of taking the refined petrochemicals and putting them in your gas tank, farmers, pesticide manufacturers, etc., take the same petrochemicals, use them to grow corn, process the corn into ethanol and then you put that in your gas tank. Either way vast quantities of fossil fuels are required.
There is one big difference ... We'll have to stop eating and use all of our agricultural land to grow crops for ethanol and biodiesel. The price of corn is already zooming up thanks to the ethanol demand.
because that's where the money is---that's why!
for the same reason the pharmaceutical companies like the medicare drug prescription plan (as is it now). that's where the big money is. big profits and guarantees of not negotiations on prices.
WoW! I'd like that plan too.
corporate farmers see big bucks growing bio fuel materials....and get those subsidies that guarantee profits. if you were guaranteed a profit on your business ventures would you tout it and be gung-ho to see it materialized?
you bet you would!
bio-fuels are not and never will be the solution to america's energy problems.
- by getcentered January 24, 2007 4:30 PM EST
- What a foolish one-sided look at the energy debate.
- Reply to this comment
See all 17 CommentsHenry Payne of the National Review Online, who writes this opinion, says nothing positive about bio-fuels. I live in California and we don't have much of bio-fuels out here where one might expect to find it.
So why would he want to kill an idea before it can get off the ground?
People like Henry Payne will always stand in the way of progress, because when things change so does where the money goes.