Ethanol Tariff Update

A couple of months ago, I wrote about the 54-cent-a-gallon tariff on imported ethanol (here, also here.) On Friday, President Bush suggested that the tariff should be eliminated, or at least temporarily waived in order to ease the gasoline supply & price crunch which is expected for the summer.

Both the corn farmers and the sugar industry will oppose this initiative, and it’s unlikely that it will make it though Congress unless the administration does some very effective PR work.

Update: Today’s WSJ endorses the elimination of the tariff, and credits Congressman John Shadegg (Arizona) for pushing this idea. (Shadegg’s specific proposal is to suspend the tariff until 2007.)

Ethanol policy also needs to consider impact on the transportation network. Ethanol cannot be shipped via conventional pipelines (a fact which has received little media attention until very recently) and has to go by rail or barge if long distances are involved. Major railroad bottlenecks seem likely, given that some of the routes needed for domestic ethanol are already heavily used for coal and grain. The Union Pacific has already slowed down shipments of ethanol to the DFW area due to heavy congestion in its rail terminal there.

Imported ethanol might help the overall transportation-capacity situation to some extent, since it can come directly into major east and west coast ports, but isn’t going to help with bottlenecks at blending facilities.

12 thoughts on “Ethanol Tariff Update”

  1. While I oppose the tariff on principle I wonder how much good eliminating it will really do. Using ethanol requires special equipment all along the supply chain and most of the country isn’t equipped to do so. I don’t think we can use significantly more ethanol than we currently do in the short term i.e. months or years.

  2. Everybody wants to talk about using less oil and being more energy independent, but the most obvious steps to get moving toward that goal are rarely mentioned.

    First, abolish all government mandates for vehicles of any kind. The regulations requiring that cars and trucks satisfy a myriad of goals other than getting someone from here to there cause vehicles to be overly heavy, complex, and have inefficient engines.

    Second, abolish all the various restrictions on which vehicles can be driven for routine commuting. Some people might be very happy to drive a snowmobile to work in winter or a lightweight dune buggy type vehicle in summer. I know a few people who might like a horse.

    It is another variation of nanny state over protectiveness that keeps people from making their own decisions. Adults do not require a “mommy” in some government office to tell them what to drive, or to wear their galoshes if it rains.

    Third, abolish all taxes on fuels. These account for almost half the price of gasoline and deisel in some states.

    Fourth, abolish fuel mandates for special mixtures and additives. If someone wants to use ethenol, fine. Why make every driver pay a subsidy to farmers who make up less than two percent of the population? Or to mega-sized agricultural corporations, who are, in fact, the major beneficaries of this policy.

    Fifth, replace any of the above laws regarding road maintenance, pollution, or safety concerns with user fees and inspections. If someone wants to drive a lawnmower to work, fine, as long as it is insured, all fees are paid, and it stays off high speed freeways. Violations should result in confiscation and destruction of the vehicle and jail time.

    The reaction to these proposals will be utter hysteria and mystified non-comprehension on the part of all those who cannot imagine living in a society in which ordinary people are allowed to decide basic questions for themselves.

    We have come so far down the road toward non-liberty that the idea of letting a citizen decide what he drives to work or the grocery store is considered fanciful. Pity.

  3. 1.Get rid of the tarrif.

    2.Increase the gas tax, but refund it for business and commuting expense (this can be done with electronic payment used explusively for these reasons).

    3. Eliminate regulation on fuel mixtures (only requirment should be to clearly inform customers of the mixture and quality).

    4. I’ll say it again, STOP INEFFICIENT DRIVING.

  4. Another thing to consider is having truck only roads and car only roads. Also banning trucks from roads near cities during peak traffic hours.

    Vehicle Performance Requirments should be considered, not for mechinical efficiency, but for stopping and accelleration capability.

  5. re. Inefficient Driving,

    Some pretty good ideas. I practice long, slow decelerations at lights (trying to keep the rig moving) myself.

    I do take issue with the quick acceleration saving fuel though. It might possibly save fuel for ALL the drivers on average (the argument given is that fewer drivers will have to stop at the lights). But it will cause MY fuel consumption to rise for sure.

    BTW I think accelerating more slowly and driving more slowly (say 5 Mi/Hr slower) than the surrounding traffic is a good idea for a number of reasons.
    1)fuel consumption is decreased.
    2)(more importantly) and (I’d conservatively estimate) it cuts the likelihood of being involved in an accident by 50%.
    3) Since the force impact one experiences in a collision is squared with a doubling of speed, any injuries sustained will be significantly reduced.
    4)It makes it easier to “caillac” (relax) down the road.

    On the negative side: If you have to drive in suburban traffic you may hit a few more red lights as well traveling at a slower rate. Say 40 minutes instead of 30 for a twenty mile trip. Not a bad trade off IMO.

  6. How does driving more slowly than surrounding traffic decrease the likelihood of an accident? Speed mismatches can cause accidents, though a 5mph difference isn’t likely to cause much more.

  7. ATM, I’d suggest the 5MPH-slower driver creates open space in front of her (so there are “fewer cars”, so to speak, to hit.

    Probably, more importantly, it gives folks driving beyond their (and/or their cars) capabilities a place to get in front of you – a good place for a dangerous or agressive driver to be.

  8. Visit policy Pete’s website to add more “fuel to the fire”. He has a great chart that paints an enlightening picture.

    Policy Pete

    The left sidebar speaks about the ethanol / methanol issue.

  9. People are still driving like homicidal maniacs, so gas prices, by definition, can’t be “too high” because the market isn’t reacting yet.

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