Tuesday, March 20, 2007

Cheap fuel: Getting Corn-Holed by Special Interest.


After Bush's visit to Brazil last week "promoting" ethanol and other bio-fuel production, as well as free trade, I am left wondering why a self described free trader still refuses to remove the $.54 tariff on Brazilian ethanol while in the same breath is preaching lessening our dependence on foreign oil. Lets get serious here, the tariff keeps ethanol prices inflated so domestic producers will get a higher price, all the meanwhile we are spending nearly 1/2 a trillion dollars on a war that is causing instability in the middle east increasing gas prices even further. The free market solution is simple: mandate that gasoline contains 1-3% and increase over time as market prices allow. We dump the tariff bringing in a flood of ethanol to help with the increased demand all the meanwhile corn prices will go up due to more corn being funneled to ethanol production. Now we can end subsidising corn and sugar farmers since prevailing market conditions will not justify it.
This will be a huge boost to the economy. John Deere and ADM would go through the roof and Americas farmers will be expanding and creating more jobs and wealth.
Another caveat is that the farm subsidies that keeps corn prices artificially low is driving Mexican farmers away from corn exporting, they can't compete with big agri-business up north even though they have cheap labor costs. Higher employment in Mexico means fewer immigration issues that are all over the news lately.
cheaper than petroleum, why not build our By some twisted logic the oil whores in this administration would rather be getting their fuel from unstable, unfriendly and terrorist regimes, instead of Americas farmers and our neighbors to the south. Oil prices will continue to rise over time and eventually Bio-fuels will consistently be less expensive than petroleum. Common sense would say that we need the infrastructure now to augment our fuel supply instead of just increasing the Strategic Petroleum Reserve again and again, which by the way takes more oil off the market there by driving up prices further.
When the folks that run the country start thinking of supporting farmers and clean fuel instead of defence contractors and subsidising unstable regimes we may have a return of a free market that can benefit all.

No comments: