The Master Speaks – Oil and Alternative Fuels

In his latest column, the Master speaks of the idiotic ideas coming out of Congress to fix the problem of high gas prices. There is, of course, the $100 pacifier, I mean rebate offered to every one of us by Senate Republicans so that we’ll shut up and sit down. There’s the call for investigations into price gouging by Big Oil. And then there’s the proposed windfall tax on which Mr. Lytle has already commented.

None of these “solutions” will work. The rebate plan makes me ashamed to be called a Republican. The windfall tax is just plain stupid. And as for the investigations, The Master says,

Precisely 10 years ago (April 29, 1996) as gas prices reached a shocking $1.27 a gallon, President Bill Clinton ordered his Energy and Justice departments to launch investigations to find out why.

They didn’t find any price gouging then, either. What a surprise. But, politicians still move on with their sound bite policies that sound good but don’t really do anything. And so they are at it again. Of course, they could have saved themselves some time (and us taxpayers some money) if they simply read Texian Weblog. Last September, I saidof the price gouging charge,

But that would mean that all the oil companies are colluding, even companies like Citgo, which is owned by Venezuela’s Socialist government. It is unlikely that not one of the many oil companies would break away and lower its prices to capture market share and gain even higher profits.

The problem is not price gouging, it is supply and demand. And we might as well get used to it. Lower taxes, increased engine efficiency, hybrid cars, and conservation are only temporary solutions and only delay the inevitable. With nations like China and India industrializing and demanding more energy, there simply isn’t enough oil to go around. If our nation is ever to live up to its full potential, energy cannot remain an issue. This means we must find renewable, domestic sources of energy. It is actually a good thing that gas prices are high. High prices encourage the search for alternative sources.

One of those sources is ethanol. In the U.S., ethanol is produced from corn, though it can be produced from many types of plants. But, the government’s focus on ethanol has created a problem. The Master says,

Last year's energy bill mandates arbitrary increases in blended ethanol use that so exceed current ethanol production that it is causing gasoline shortages and therefore huge price spikes.

Why don't we import the missing ethanol? Brazil makes a ton of it, and very cheaply. Answer: the Iowa caucuses. Iowa grows corn and chooses presidents. So we have a ridiculously high 54-cent ethanol tariff and ethanol shortages.

Ah . . . sound bite policies. And government regulations. What would we ever do without them? You know, instead of investigating Big Oil, how ‘bout we investigate Big Government?

According to a report from CNN’s Frank Sesno, 40% of motor fuel burned in Brazil is ethanol. In America, that number is 3%. They produce their ethanol from sugar cane.

"A green ocean" was how my Brazilian host described it. About half of it becomes sugar. The other half becomes ethanol for cars and trucks. "Alcool" was sold at every gas station I saw. It is cheaper than gasoline and when you fill the tank, it smells like molasses.

Brazil says that within a year they will no longer have to import oil. Why can’t we do this here? This idea of producing ethanol from sugar cane is intriguing to a Houston boy like me. As everyone should know, Houston is the hub of the energy industry because Texas is the nation’s largest oil producer. Houston also has a sub-tropical climate (which means its hot and humid most of the year). What grows very well in a sub-tropical climate? Sugar cane. Sugar Land, a suburb to the south of Houston got its name from the massive sugar cane plantations that existed there long ago. Imperial Sugar Company is still headquartered there. So, if we started producing ethanol from sugar cane, Houston would still be the industry hub. And not only Houston, but poor farmers throughout the South would be helped by sugar cane ethanol. Besides, think of how cool it would be to drive a car that runs on what is essentially rum. It brings a new meaning to the term “rum-runner.”

All kidding aside, this is unlikely to happen because, “Iowa grows corn and chooses presidents.” Once again, politics gets in the way of good ideas.

So, what’s the solution here? Once again, something that will never happen. Remove government regulations and tariffs, and allow the free market to adjust to the scarcity of resources. If oil is becoming too scarce and too expensive, the free market will search for other sources. Without tariffs on foreign ethanol, the energy industry would be able to incorporate cheap ethanol into its product. As consumers see the price of gas go up, and the price of ethanol blends go down, flex fuel vehicles will become more popular. Eventually, so long as our sound bite government doesn’t get in the way, we will achieve energy independence like Brazil.

–J.E. Heath
per-fidem.org

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