NCPA - National Center for Policy Analysis


March 14, 2008

One of the many mandates of the Energy Policy Act of 2005 calls for oil companies to increase the amount of ethanol mixed with gasoline.  Unfortunately, there will be many unexpected consequences when we use ethanol as a replacement for gasoline, says Walter E. Williams, Professor of Economics at George Mason University.

For example, ethanol contains water that distillation cannot remove:

  • As such, it can cause major damage to automobile engines not specifically designed to burn ethanol.
  • The water content of ethanol also risks pipeline corrosion and thus must be shipped by truck, rail car or barge.
  • These shipping methods are far more expensive than pipelines.

Other issues:

  • Ethanol is 20 to 30 percent less efficient than gasoline, making it more expensive per highway mile.
  • It takes 450 pounds of corn to produce the ethanol to fill one SUV tank. That's enough corn to feed one person for a year.
  • Plus, it takes more than one gallon of fossil fuel -- oil and natural gas -- to produce one gallon of ethanol.
  • 1,700 gallons of water are needed to produce one gallon of ethanol.
  • On top of all this, if our total annual corn output were put to ethanol production, it would reduce gasoline consumption by 10 or 12 percent.

Ethanol is so costly that it wouldn't make it in a free market, says Williams.  That's why Congress has enacted major ethanol subsidies:

  • $1.05 to $1.38 a gallon, which is no less than a tax on consumers.
  • In fact, there's a double tax -- one in the form of ethanol subsidies and another in the form of handouts to corn farmers to the tune of $9.5 billion in 2005 alone.

Source: Walter E. Williams, "Big Corn and Ethanol Hoax,", March 12, 2008


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