President Barack Obama's continued push for ethanol is misguided, says Manhattan Institute fellow Max Schultz.
"Notwithstanding federal subsidies and mandates that force-feed the biofuel to the driving public, ethanol is proving to be a bust," Schultz writes in The Wall Street Journal.
"Before we're through, we'll likely see another ethanol bubble."
Schulz points out that despite the 51-cent-per-gallon tax credit the government provides to ethanol producers and a mandate that ethanol be blended into the nation’s gasoline supplies, ethanol producers are going broke at a fast clip.
“Three years ago, ethanol producers made $2.30 per gallon,” Schulz says. “But with the global economic slowdown, along with a glut of ethanol on the market, by the end of 2008 ethanol producers were making a mere 25 cents per gallon.”
For all the pain ethanol has caused, it displaced a mere 3 percent of our oil usage last year. Yet President Obama has set $6 billion aside in his stimulus package for federal loan guarantees for companies developing innovative energy technologies, including biofuels.
Increased biofuel production will drain water supplies, critics say.
“We're definitely looking at something where the cure may be worse than the disease," Brooke Barton, a corporate accountability manager for CERES, told Red Orbit.
"Biofuels are off the charts in water consumption.”
CERES, a group backed by institutional investors that focuses on the financial risks of climate change, estimates that freshwater demand for consumption will increase 25 percent by 2030 globally as the world population expands from 6.6 billion to about 8 billion and more than 9 billion in 2050.
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