Monday, August 20, 2007

The chimera of energy independence 

Local DFL leaders are still drinking the ethanol.
Calling today�s investment in ethanol production �feedstock,� U.S. Rep. Collin Peterson believes the nation can reach energy independence in 10 to 15 years.

�The bottom-line goal is for us to get off foreign oil,� Peterson, DFL-7th District, said Friday at an energy conference at Bemidji State University.

He was joined by U.S. Rep. Jim Oberstar, DFL-8th District, who said in his remarks that moving more Americans to public transit � or bicycling � can negate the need to import millions of barrels of foreign oil.
(Yes, I know, I laughed at the bicycle reference too!)

The biggest issue is that it won't. It turns out first of all that in terms of emissions, growing more for biofuels causes a greater net harm than burning more fossil fuels and planting trees with the land you didn't put into biofuel production. Prairie grass might be better, but that wouldn't be bragged about by Rep. Peterson.

Second, it might be nice for Minnesota agriculture to push up prices, but it really makes Hugo Chavez and the poor around the world unhappy. One of those is a good thing. The other is not. Think there's a connection between tortilla prices in Mexico and immigration? Of course, it also turns out increasing developing country wealth has also raised food prices ... but isn't that all the more reason to not divert crops to biofuels, to allow those countries to enjoy their newfound gains?

Corn-based ethanol is only a stepping stone to making ethanol from other sources, such as wood wastes or switch grass, Peterson said, adding that negative press has been �ginned up� by special interests who claim Third World countries are starving because they can�t get American corn, which is now used to make ethanol, a blend of gasoline and bio-fuel.

�There�s a lot of stuff being ginned up out there by some of these people saying that we�re going to starve people in Africa because we�re making all this corn into fuel, which I think is a bunch of baloney,� he said.

�This ethanol, and some extent biodiesel, opportunity has repriced agriculture,� he said. �And it was about time, because we have been selling corn for the last 10, 15 years below the cost of production. We were using the government to finance that benefit, going to the big grain traders to feed and livestock producers, big dairy producers.�

Now with higher corn prices due to ethanol, the government can step out, he said. �One of the positive things is that we�re now seeing a price in the marketplace for corn and soybeans where you can make money without government help, and that�s good.�

Do you think that will come back to us in tax cuts? I wouldn't bet on this. Politics relies on being able to favor one's special interests. Witness two local legislators:

While federal lawmakers talked about pending legislation, Minnesota state legislators talked about three bills they passed and Gov. Tim Pawlenty signed earlier this year.

�We have passed the most forward-looking renewable energy legislation in the country,� Assistant Senate Majority Leader Tarryl Clark, DFL-St. Cloud, told the 200 people attending the energy summit.

Rep. Bill Hilty, DFL-Finlayson, said the three new laws require an increase in renewable energy sources such as wind, while providing loans and grants to meet the goal of producing 25 percent of electric energy from renewable sources by 2025.

They produce cheaper energy, they say, and use the savings to fund loans and grants to produce more renewable energy. We will not see the savings.

They are not interested in energy independence; politicians of both stripes only want to divert dollars spent on a key good to their favored interests. If you want people to be energy independent, just let prices rise and have people learn to conserve as best they can. But then, that doesn't allow the rent-seeking.

FMI: WSJ, Energy Independence, A Dry Hole?

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