29 Jun 2006
Ethanol Fraud

The real title on this piece from CNN/Money is "Ethanol War Brewing", and it's written from the standpoint of investors trying to decide into which ethanol companies to sink their funds. But the relevant part of the article details something far more nefarious, something that most Americans are blithely unaware of, in the media hype over "reducing dependence on foreign oil" and "cheap bio-fuels for the future".

You see, ethanol currently accomplishes neither of those: it takes nearly as much energy to create and distribute it as it saves in "foreign oil", and it sure ain't cheap:

The price of the stuff has shot up 65 percent since May from $2.65 a gallon to $4.50, largely thanks to the oil companies who have started to put small quantities of it in our gas as a clean-air additive (most cars can handle a blend of up to 10 percent ethanol in their tanks).

That means the fuel for our cars is now about 60 cents a gallon more expensive than it would be if it were just gas, according to analysts at JPMorgan. As drivers, ethanol is lightening our wallets; as investors, though, it could well fatten them.

Which immediately brings to mind an old libertarian slogan: TANSTAAFL. There ain't no such thing as a free lunch!

Grain alcohol is seen as the new gasoline. But which recipe is the one for investors to bet on?

(link) [CNN - Money]

09:23 /Agriculture | 1 comment | permanent link