While reading a Wall Street Journal Op-Ed this morning that discussed ethanol, I came across the term 'logrolling'. It just sounds sort of seamy, doesn't it? If it were something for politicians to be proud of, I imagine we'd see the term and hear the term used often during political races. Instead, this term is hidden from sight, and I don't recall ever hearing it come from the mouth of a politician...whether about himself or herself, or even someone with whom they were upset. It is, to me, reminiscent of the Lyndon Johnson era of politics. The days of 'bourbon and branch water' celebrating one's victory or another's defeat.
Back to ethanol. This Op-Ed was written by Robert Hahn, the former co-chair of the U.S. Alternative Fuels Council under President Bush 41. He discusses the relative value or lack of value that is 'ethanol'. To begin, us taxpayers are subsidizing ethanol to the tune of $0.51 per gallon when it is blended with gasoline. That subsidy is necessary to make us think we're getting value from ethanol. If there were no subsidy, we'd be paying $3.50 or more per gallon of gasoline if it contained ethanol. But of course, if there were no subsidization, there would be no ethanol since the numbers simply don't work out. Among those factors are simply poorer gas mileage and disruption of our food supplies.
While we subsidize the production of ethanol to the tune of $0.51 per gallon of gasoline, we also effectively block the importation of ethanol by adding a tariff of $0.54. Doesn't it seem that, if ethanol were the great thing it is being claimed to be, and if we needed more ethanol than we could produce on our own, we would be encouraging the importation of ethanol and not discouraging it? There's that 'logrolling' thing. Logrolling is described as the practice of one politician supporting the local needs of another politician in return for that person's vote on a bill important to the second person. It is just another way for politicians to send money to local pockets thus assuring re-election time after time. We have to believe that our elected representatives would never withhold a vote for petty or pecuniary reasons.....don't we?
Using modest assumptions, Hahn arrives at the conclusion that ethanol use in 2012 will result in a net loss of $1 Billion to our economy. That means that we'll have spent $1 Billion more on ethanol than will have been returned through its use. We used 15% of our national production of corn in 2005 for the creation of ethanol. And that replaced only some 2% of gasoline used. In fact, if we were to use 100% of our domestic corn production for ethanol, all that would do is replace 12% of the gasoline we used.
The more corn we use for ethanol production, the greater the collateral damage we cause. That is the principal of unintended consequences at work again. Scientists have now learned that the use of ethanol actually increases the amount of nitrogen oxides placed into our atmosphere...and that adds to the smog problem we have in our country. As this saga unfolds, I suspect we'll learn more and more.
As a matter of fact, our Congress is getting a little skittish about ethanol and is beginning to question its own blind support of ethanol, the boondoggle most of us have been able to see (and feel) for some time now. Isn't it interesting that our Congressional representatives can be both leading edge thinkers and trailing edge thinkers? I wonder if any of that phenomena could be related to the amount of money that flows to home districts? There I go being cynical again!
