Obama Gets Ethanol Power

Financial Post by Diane Francis

April 04, 2008 — The three U.S. Presidential candidates agree on many policies but they differ dramatically as to what to do to staunch the growing dependence on foreign oil and its far-reaching economic, strategic and foreign policy ramifications.

The Arabs’ oil cartel and Asian demand insures that oil prices will remain high, or go higher, thus continuing to injure the U.S. and EU financially and making both more reliant on unstable, hostile dictatorships and fanatics. Canada, on the other hand, benefits from high prices overall, but our consumers are also harmed along with our trading partners.

The oil import crisis represents nearly half of America's trade deficit and is so serious that even the Bush administration passed laws that require more ethanol usage plus a 50-cent-a-gallon incentive to ethanol producers.

So where do the three candidates stand on this important issue?

Obama has it figured out and spelled out. Hillary is ducking the issue and McCain would rather fight than switch. He is commited to the Middle East strategy, to secure supplies.

Obama's specific remedy is to pass a law that would mandate flex-fuel engines in automobiles in order to break the oil monopoly, as did Brazil. Letting consumers choose or blend gasoline and ethanol exerts downward price pressure and is good for the economy. Extra cost? US$100 a car.

Oil barons demonize ethanol
But the oil lobbyists are powerful and blame this much cleaner fuel for everything from depleting water supplies to using more oil than is used to make gasoline. They say ethanol subsidies destroys the "free" market, as if there was one in transportation fuels.

A new book, called “Energy Victory”, debunks these myths and makes the scientific case in favor of ethanol. It s written by scientist/engineer Dr. Robert Zubrin, a NASA consultant and researcher in Colorado. The book analyzes the energy input myth, citing the most recent and authoritative study, in Science Vol. 311 in January 2006: ethanol production requires one-tenth the amount of energy inputs as does gasoline production. (Sugar cane is a more efficient feedstock than corn used in North America, but corn is still dramatically more beneficial than crude-oil fuels.)

Likewise, he maintains the subsidies are also mythology by lobbyists. Last year, for instance, he said the U.S. produced eight billion gallons of ethanol and the 50-cent subsidy cost taxpayers US$4 billion. But the eight billion gallons replaced the need to import US$20 billion worth of crude oil. By including all figures, the subsidy becomes an investment in saving billions.

Subsidy myth
Besides that, the upfront 50 cents per gallon is needed, as is a flex-fuel mandate and another requiring ethanol pumps in gasoline stations, to impose competition on a monopoly marketplace controlled by oil interests.

The Brazilians faced similar problems 15 years ago and developed flex-fuel vehicles. Rather than make consumers choose the fuel of choice ahead of time, Brazil gave them an ability to pick the lower priced of the two at any given time. Flex-fuel cars keep the gasoline and ethanol producers honest, said Dr. Zubrin, who spoke in Canada this week and advocates ethanol as a national security measure against hostile and fanatic oil regimes.

Ethanol can never replace oil, Albertans will be happy to know, but Brazil demonstrated how large-scale ethanol production can create a huge industry and avert bankruptcy due to soaring oil bills.

“Obama is the only candidate with a flex-fuel policy in his platform on page 9,” said Dr. Zubrin adding that Hillary says nothing and McCain’s former economic advisor called ethanol production a “scam” a few years ago. That advisor, Kevin Hassett, wrote a forgettable book called “Dow at 36,000” in the mid-1990s.

“Ethanol reduces greenhouse gas emissions by about 25% [over gasoline], reduces petroleum requirements [over gasoline] by a factor of 10,” cited Dr. Zubrin from page 506-508 of the Science 2006 study.

“Energy Victory” details how the oil cartel is economically harming the western world and also how hydrogen power and fuel cells will never be economically viable alternatives.

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