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Fuel for thought

January 13, 2006

WITH BIG AUTO SHOWS happening in Detroit and Los Angeles, there has been a lot of talk in recent days about making cars that burn less gas. As they too often do, such discussions have focused on the auto industry's preferred alternative fuel: ethanol, a type of alcohol made from corn or sugar.

General Motors and Ford have been touting their "flex-fuel" vehicles -- meaning they can run on gas or a blend made up of 85% ethanol, called E85 -- and working with oil companies to increase the number of stations that sell ethanol. One such program was announced last week by Chevron, which plans to quadruple the number of stations selling E85 to the public in California (from one to four).

If anyone thinks this is a demonstration that oil companies and car makers are serious about promoting ethanol as a competitor to gasoline -- well, there's some real estate near the Salton Sea that may soon be available. The promotion of ethanol in the United States has been so tied up in federal pork and corporate welfare that it's hard to see it as anything but a boondoggle. It doesn't have to be this way.

U.S. car makers get credit for building flex-fuel vehicles that lets them reduce gas efficiency on other models. The effect is to make cars less fuel efficient overall, boost emissions and increase reliance on imported oil. Meanwhile, most owners of flex-fuel cars aren't even aware of it, and in most states outside the Midwest it is nearly impossible to buy the fuel.

Oil companies are under fire for runaway profits, and U.S. car makers are being hit for building too many gas guzzlers, so both are trotting out ethanol largely as a public relations move. Four ethanol stations in California hardly represent a serious push.

But the boon for auto makers is nothing compared to the pork that ethanol generates for corn growers. Even with the high price of gas, the only reason ethanol is comparably priced is that it is subsidized to the tune of $3 billion a year in public money.

Ethanol burns cleaner than gas, and the hope is that it will someday significantly cut oil consumption and pollution. That day is still far off. Until then, there is a way to boost ethanol consumption that wouldn't cost taxpayers a cent and would make E85 a legitimate competitor with gasoline: import it.

Brazil has managed to turn ethanol into a competitive alternative fuel. Ethanol now accounts for as much as 20% of Brazil's transport fuel market, according to the Wall Street Journal. Brazil succeeded only after decades of government spending on ethanol production. Further, Brazilian ethanol is mostly made from sugar, which is cheaper than making it from corn. Yet little is exported to the U.S. because of steep tariffs.

If President Bush and Congress are serious about boosting ethanol -- and the Energy Policy Act of 2005 calls for doubling ethanol use by 2012 -- they should start by dismantling the tariffs on Brazilian imports. Not that the representatives of corn-growing states would let that happen without a fight.

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