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Ethanol Power and sugar subsidies

By Paul Crowe

Ethanol powered funny car
One of the many fuels bandied about as substitutes for gasoline is ethanol. In the U.S., corn is one of the major plant sources for this fuel, however, in Brazil, sugar cane is the plant stock used to ferment the fuel.

In Brazil, a lot of cars are sold as flex fuel capable meaning they can run on gasoline or ethanol blends, some models are only available in flex fuel versions. They grow a lot of sugar cane in Brazil and the cost of ethanol is less per mile driven than gasoline even though ethanol yields less miles per gallon. Whether the cost differential is due to tax differences isn’t clear.

An interesting sidelight to this is that U.S. sugar producers are currently protected from low cost sugar imports by import restrictions which means they can keep their prices high. The result is that ethanol made from U.S. sugar is too expensive to be competitive as fuel so these same farmers can then get subsidies for converting their sugar to ethanol, sweet deal for them, not so sweet for you and me.

Of course, this gets into another issue which is how much energy is used to produce ethanol and how much do we get back out. On that issue, gasoline is hard to beat.

Wouldn’t it be nice if the government would stay out of the market and let prices provide incentives for production of whatever alternative fuels worked best from whatever sources were most economical? Then people could decide for themselves what they wanted to put into their tank.

via FuturePundit

Posted on October 11, 2005 Filed Under: Economics and Politics


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Comments

  1. Gary Dikkers says

    October 16, 2005 at 4:54 pm

    < < They grow a lot of sugar cane in Brazil and the cost of ethanol is less per mile driven than gasoline even though ethanol yields less miles per gallon. Whether the cost differential is due to tax differences isn’t clear. >>

    There are two simple to understand reasons why Brazil has been succesful with using ethanol as motor fuel:

    1. The process for converting the sugars in sugarcane to ethanol is more efficient (and less energy intensive) than the process for converting the starches in corn to ethanol.

    2. Much of Brazil’s sugarcane crop is still harvested using manual labor. They don’t burn all the fossil fuels our corn farmers consume growing, harvesting, and transporting corn.

    If the U.S. transitions to fuel ethanol, Brazil and the Amazon basin are likely to become the OPEC and Saudi Arabia of ethanol.

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