The stupidest federal subsidy.

The conventional wisdom debunked.
July 19 2005 8:12 AM

Corn Dog

The ethanol subsidy is worse than you can imagine.

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There's another problem: Ethanol, when mixed with gasoline, causes the mixture to evaporate very quickly. That forces refiners to dramatically alter their gasoline to compensate for the ethanol. (Throughout the year, refiners adjust the vapor pressure of their fuel to compensate for the change in air temperature. In summer, you want gasoline to evaporate slowly. In winter, you want it to evaporate quickly.) In a report released last month, the GAO underscored the evaporative problems posed by ethanol, saying that compensating for ethanol forces refiners to remove certain liquids from their gasoline: "Removing these components and reprocessing them or diverting them to other products increases the cost of making ethanol-blended gasoline."

In addition to the transportation and volatility issues, ethanol will add yet more blends of gasoline to the retail market. Last year, American refiners produced 45 different types of gasoline. Each type of gasoline needs specific tanks and pipes. Adding ethanol to the 45 blends we already have means we will be "making more blends for more markets. That complexity means more costs," says David Pursell, a partner at Pickering Energy Partners, a Houston brokerage.

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There's a final point to be raised about ethanol: It contains only about two-thirds as much energy as gasoline. Thus, when it gets blended with regular gasoline, it lowers the heat content of the fuel. So, while a gallon of ethanol-blended gas may cost the same as regular gasoline, it won't take you as far.

What frustrates critics is that there are sensible ways to reduce our motor-fuel use and bolster renewable energy—they just don't help the corn lobby. Patzek points out that if we channeled the billions spent on ethanol into fuel-efficient cars and solar cells, "That would give us so much more bang for the buck that it's a no-brainer."

Correction, July 20, 2005: The article originally stated that ethanol critics David Pimentel and Tad Patzek received no oil-industry funding. Pimentel receives no such funding, but Patzek runs the UC Oil Consortium, which does research on oil and is funded by oil companies. His ethanol research is not funded by the oil industry. Return to the corrected sentence.

Robert Bryce, a senior fellow at the Manhattan Institute, is the author, most recently, of Power Hungry: The Myths of "Green" Energy and the Real Fuels of the Future.

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