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 The fact that the government standards on Ethanol have not been adjusted or repealed helps keep those prices high.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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