RE: Gasoline vs. ethanol

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From: Dan Kohn (
Date: Sun Mar 12 2000 - 21:50:18 PST

I believe this is deeply mistaken. I find it very unlikely that the US Farm
report is unbiased, but I can't tell, because you didn't include a URL.

Here is Michael Kinsley in Slate

Ethanol is a ludicrous fuel made out of corn, at a cost far higher than the
petroleum it replaces, produced with a huge government tax subsidy, which
started during the energy crisis a quarter-century ago and has long since
become a classic case study of stupid policy entrenched by special interests
(in this case farmers and Archer Daniels Midland, the company responsible
for the fabulous discovery that if you tell the government what to do in
commercials on every Sunday talk show, the government apparently is
powerless to resist).

Now, fuel cells are incredibly exciting technology that will have a huge
effect on reducing pollution. But, by far the most economical deployment
will be to distill the hydrogen out of gasoline using the *existing* network
of gas stations, rather than trying to upgrade them to store compressed

Also, see <>:

Ethanol producers receive an array of subsidies from federal and state
governments. The largest subsidy is the exemption from federal fuel taxes.
Gasoline companies receive a tax break of 5.4 cents for each gallon of
gasohol they sell. Because gasohol is usually sold in a mixture of nine
parts gasoline to one part ethanol, each gallon of ethanol receives the
equivalent of a 54 cent break from the federal tax code. While it is often
misleading to speak of tax deductions and credits as the equivalent of a
direct federal subsidy, it is certainly the case that, without the massive
distortion of the tax code, there would be no ethanol industry, given the
large cost differential in the production of ethanol and traditional

I would be curious, though, if you could find an unbiased source that could
say at what cost of gasoline it would actually make sense to convert over
vehicles to E-85.

Note, though, that rising gasoline price spikes are a scary thing and could
very well cause the bubble to pop. Here are Krugman's thoughts on the
subject <>.
But, ethanol is unlikely to be the solution.

                - dan

Daniel Kohn <>
tel:+1-425-602-6222  fax:+1-425-602-6223 

-----Original Message----- From: Adam L. Beberg [] Sent: Sunday, 2000-03-12 21:07 To: Subject: Gasoline vs. ethanol

According to the US Farm report, Ethanol is now cheaper than unleaded as of some time last week. And unleaded shows no signs of coming down, ever... while corn prices are going down down down thanks to genetic tinkering.

I wonder how long the oil industry can suppress this information from the public while convincing congress to lower gasoline taxes. They better get those prices down in a hurry before E-85 (85% ethanol fuel burning vehicles) sales start to skyrocket.

Or is OPEC just in a race to cash in before the fuel-cell/solar/ethanol make them irrelivant?

- Adam L. Beberg The Cosm Project - -

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