Thursday, October 05, 2006

E85 grant is a flagrant waste of money

The state is accepting a $1.3 million federal grant to build more E85 stations along I-65. I am against this for several reasons.
1. E85 is not a viable replacement for gasoline. It costs more to produce. Vehicles need to be specially designed to use the fuel. Even many owners of flex-fuel cars and trucks end up choosing regular gasoline because they get better mileage with it.
2. If an energy source is economically viable, what consumers pay would be able cover the costs of production. Such a source would not need subsidies. If it is not economically viable, no one should bother with it.
3. Ethanol has its own environmental drawbacks. Farmers spread chemical fertilizers and pesticides on corn fields. These chemicals wash out into rivers and streams, and cause harm to fish.

Ideally, if the state does not need a grant for the purpose for which it was intended, it should decline the money. This of course goes against most politician's natural instincts. Many state officials have the attitude that if they don't get to waste this money, some other state will do it. Indiana should make a stand and set an example by declining unnecessary federal grants. If other states follow our lead, this will go a long way towards reducing the federal deficit.

7 comments:

  1. Jeff Pruitt11:26 AM

    I agree w/ you Robert.

    "Free Market" politicians (note I didn't just say Republicans) have continued to protect farm subsidies by refusing to allow the import of ethanol.

    Also, there is no doubt that flex-fuel vehicles get 20% less fuel efficiency. The government's own testing shows this - go to www.fueleconomy.gov for the results.

    And what would happen to the cost of ethanol if subsidies and tax breaks were taken away? Promoting other energy sources is important but so is doing it in a fiscally responsible and ethical manner...

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  2. I intend to be a free market politician who keeps his word. I will not fork over taxpayer dollars to companies. I will not keep prices artificially high through tarriffs.

    Who were you referring to besides Republicans? You realize that Congress determines the nation's trade policies, and Ron Paul is the closest thing to a libertarian in the House.

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  3. Jeff Pruitt12:28 AM

    Robert,

    I was referring to every single politician who has perpetrated the "free market" fraud upon this country. Most of our trade agreemenets are certainly not free market and they are DEFINITELY not fair.

    There are too many politicians to list here but let me start by saying Bill Clinton exacerbated the problem w/ his trade policies...

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  4. The purpose and spirit of the US participating in these trade agreements is to open up new foriegn markets for US exports. But the European Union is still pretty frustrated over US agricultural subsidies. So they impose retalitory tarriffs on US goods.

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  5. Anonymous12:12 PM

    From the studies that I have read, on an energy basis, it takes more energy to create E85 than the energy derived from the fuel.

    You are right Robert. The greed of currently-empowered politicians needs to be curtailed, and only Libertarians are well suited to that task.

    One Radical Libbe-tarian

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  6. Brian8:08 PM

    I agree with some of your views Robert, but you are incorrect in implying that using E85 will not save you any in fuel costs. As of 4/6/08, the average price of E85 in Indiana is $2.77 and gas is at $3.31. A 2008 Chevy Impala will get 19 mpg on gas and 16 mpg on E85in the city.

    Using 15,000 miles annually this works out to 937.5 gallons of E85 or 789.5 gallons of gas being used. Taking these numbers and multiplying by the cost per gallon gives us a cost of $3,103.125 with gas and $2,596.875 with E85.

    Someone like me who does 90% of my driving in the city would end up saving $506.25 by using E85 even though I am getting 3 mpg less. The problem is that there are not any E85 stations in the Evansville area. So I will welcome these stations coming into my area.

    As for drivers choosing gas over E85 because they get better mileage, I hope they are taking the time to calculate the real cost to using each type of fuel based on the type of driving they are doing. Plus you get a small increase in horse power with E85.

    The environmental drawbacks you stated, namely chemical fertilizers and pesticides, is not valid because the farmers are going to use those types of chemical regardless of the type of produce they plant.

    E85 is very economically viable if the government are going to give it the exact same grants, federal loans, tax breaks, and incentives that was and still is given to the oil & gas industy.

    The real problem is that people are not taking the time to learn the real pros and cons of E85 before they are jumping to conclusions simply because of a lower number in miles per gallon.

    And before you start thinking I am some bleed-heart liberal, think again. I am and have always been a Republican. I just happen to care more about my pocket book right now then the profit margins of the oil companys.

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  7. Some things have changed and some things have stayed the same since I have written this post.

    What has changed:
    Subsidies for ethanol have gone up while oil subsidies have gone down, resulting in a lower retail price for E85. When I wrote the post, the retail prices were the same. So it did not make financial sense for motorists to use E85 at the time.

    If you know your car's MPG for gas and E85, you might find that it is cheaper to use E85 at this time. While it might make sense for the consumer to take advantage of the lower retail price, the government still should not subisidize oil, ethanol, or any other fuel source. If the federal government truely wanted to lower retail fuel prices, it would lower gasoline taxes.

    What has not changed: The use of ethanol has driven up the demand for corn, and has increased the use of fertilizers.

    What should change: Ethanol could be cheaper without the use of subsidies if we eliminate ethanol import tariffs and sugar import tariffs. Brazil makes its ethanol out of sugar at a cost that is much lower than we can hope to achieve with corn.

    I would have never mistaken you for a bleeding heart liberal. Through my taxes I am paying to subsidize a fuel that I cannot use in my 1995 Suzuki Swift.

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