THE BLOG
04/14/2006 06:41 am ET | Updated May 25, 2011

Bravo Washington! Addicting Us to Duty-Free Oil; Placing a Tariff on the Ethanol Cure

Quite rightly, if a bit late, President Bush has endorsed ethanol as an alternative to gasoline. He now supports financing for "cutting-edge methods of producing ethanol, not just from corn but wood chips and stalks or switch grass," and he wants to make it economically competitive within six years. Which is all well and good, but the government's policies actually discourage Americans from buying ethanol from Brazil, where it's already competitive, or even from investing in Brazilian ethanol. It sounds insane, and it is -- but it's true.

Brazil makes ethanol from sugar cane, which is far more efficient than our corn-based ethanol. The basic fact is that alcohol from corn provides only 30 percent more energy than it takes to make it, but sugar-based ethanol yields fully 8.3 times as much energy as it uses. What's more, the power that turns sugar into ethanol is generated by burning the squeezed-out stalks of the cane. Economists say Brazil's ethanol can compete with gasoline as long as the oil price stays above $30 a barrel (less than half of today's quoted price). And research continues; producers hope that genetically modified cane will soon be even more efficient.

Most Brazilian cars these days are run by flex-fuel motors, which can use gasoline, ethanol, or any mixture of the two, giving their owners freedom to buy whichever fuel is cheaper. Filling stations have two sets of pumps, marked A for alcohol and G for gas. Vast fields of sugar cane have replaced thousands of acres of played-out pasture land, and byproducts of cane production are used to help fertilize the soil. Thanks to its domestic ethanol production, a responsive automobile industry and government, Brazil expects to be energy self-sufficient this year.

Brazil is more than willing to share its expertise and technology. If ethanol is to become a commodity, says Eduardo Carvalho, director of the National Sugarcane Agro-Industry Union, there must be many big buyers and sellers in an international marketplace. "We are not interested in becoming the Saudi Arabia of ethanol," he says.

So why aren't Americans buying Brazil's ethanol, investing in its production, and applying Brazilian technology to energy sources more promising than corn-based ethanol? Look to our oil and agribusiness lobbyists for the answer. Their cozy relationships in Washington have resulted in a punitive tax of 54 cents a gallon on imported ethanol, not to mention huge federal subsidies to farmers that can total 61 cents a gallon for making ethanol from corn.

Even with that legalized distortion standing in the way of investment, Brazil's ethanol is so alluring that agribusiness giants including Cargill and Archer Daniels Midland and others are showing interest in spite of barriers blocking access to the American market. After all cars are driven elsewhere as well.

But if we were really serious about weaning ourselves from fossil fuels, it would make a lot more sense to drop the duty on imports, stop subsidizing corn-based ethanol if the flip side of that necessitates blocking ethanol imports from Brazil or elsewhere. As far as the oil industry is concerned one only need look at their bottom line to understand, taken together with their billions of Government support, how badly they need protection from the "predatory competition" of Brazil's ethanol. It is past time to seriously begin applying Brazilian technology, distribution and infrastructure lessons to all promising sources of ethanol, thereby opening our markets to this alternative to the oil based gasoline to which we have become addicted.

Mr. President, enough talk. Let's walk the walk.