The Only Thing That Lasts Forever Is A Government Program

The only thing that lasts forever is a government program–whether it works or not. This weekend’s Wall Street Journal (no link–subscribers only) posted an article about the government’s Ethanol policies. The use of Ethanol is raising the price of gasoline at the pump and is partially responsible for the increase in gasoline prices this summer.

The article reports:

In 2007 the Bush Administration and Congress mandated how much ethanol the oil and gas industry must purchase each year to be blended into gasoline. This year it is 13.8 billion gallons. The quotas were established when Washington thought gas consumption would rise year after year, but instead it has fallen.

But even though the program does not fit the current scenario, the program continues. American motorists will not buy gasoline that is more than 10 percent Ethanol because it costs more and can be damaging to engines, but because of the purchase requirements set on the oil and gas industry by the government, we are approaching the point where the required Ethanol would result in more than 10 percent of gasoline consumption. Because of this refiners have to buy energy credits for the Ethanol they don’t use (sounds like Cap and Trade). The credits are called Renewable Identification Numbers (RIN). The cost of an RIN used to be less than 10 cents a gallon. It is now $1.40. This translates into roughly 10 cents a gallon for consumers. As a Senator, President Obama stated that high gasoline prices were not a bad thing. The fact that the government standards on Ethanol have not been adjusted or repealed helps keep those prices high.

The article also mentions:

But even environmentalists (including Al Gore) now concede that Ethanol probably increases carbon emissions.

If we are not helping the environment, why are we doing this?

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Another Foreign Policy Blunder

Hot Air posted an article today about the status of the oil exploration that the Obama Administration loaned Brazil’s oil company Petrobras $2 billion to support.

President Obama stated at the time the money was given to Brazil:

“We want to work with you. We want to help with technology and support to develop these oil reserves safely, and, when you’re ready to start selling, we want to be one of your best customers.”

At the same time the President was giving the $2 billion for Brazilian oil exploration, he was drastically slowing down leasing and permitting in the US and whining about “subsides” to US oil corporations. It was okay to subsidize Brazilian companies doing oil exploration, but for some reason it was not okay to subsidize American oil companies.

The article points out:

The country’s state-controlled oil company, Petrobras, expects to pump 4.9 million barrels a day from the country’s oil fields by 2020, with 40 percent of that coming from the seabed. One and a half million barrels will be bound for export markets.

The United States wants it, but China is getting it.

Less than a month after President Obama visited Brazil in March to make a pitch for oil, Brazilian President Dilma Rousseff was off to Beijing to sign oil contracts with two huge state-owned Chinese companies.

This is not good news. When America has a weak President, bad things happen.

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