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E-85 Responses 20 Sep 05 From MIT: Evaluating E-85 is more complicated than you indicate. The reason is that agricultural ethanol production is government subsidized and it may well consume more oil in its production than the gasoline fuel it replaces. The senators and congressmen from ADM [the largest corn converter] do their best to obfuscate the issue and it's hard to know who supplies unbiased information on this highly charged subject. I've been following it loosely through articles in C&E News over the years. ====== Actually, your point was well made - that subject just sets me off. I deeply
trust the Bushies and their cozy relationship with companies in regulated
markets. ================= From Berkeley: Your note leaves out a couple of interesting points from the NYT article that seem relevant. First, the estimate that for ethanol to replace an appreciable fraction of imported oil, most of the Midwest would have to be planted with corn; second, that E85 is only cheaper than fossil fuel thanks to direct subsidies (otherwise it would be appreciably more expensive than regular gas) – so if its use grew, either the subsidy would have to grow a lot (= higher taxes or deficit) or else the price would rise. Viewed from a pure consumer standpoint, maybe neither point is terribly relevant, but they both imply that E85 isn’t really “disruptive”, since in current form the economics won’t permit a large-scale shift. |
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