http://www.wisconsinagconnection.com/story-national.php?Id=275&yr=2007
Some people see ethonal as a way to ease America's reliance on foreign oil. In this report from the Wisconsin Ag Connection, it shows that despite sharp tariffs, foreign ethanol suppliers can compete with domestic prices. So even though we aren't relying on foreign oil, we are beginning to rely on cheap foreign ethanol.
Matt Hartwig, from the Renewable Fuels Association asked, "Why should we be trading dependency on one energy source for dependency on another?"
Ethanol is a biofuel, though... petroleum? Not so much. The environmental economist would see this as an advantage.
The Bush Administration has said it would like to see the tariff on imported ethanol go away. There is a loophole, though. If the ethanol is dehydrated in the Carribean, the tariff is waved. Only 7% of of annual U.S. ethanol can be duty-free.
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3 comments:
I haven't even heard of foreign ethanol - is "competing" with domestic prices equal to "cheaper"? If so, laws of econ say to specialize and trade.
Protectionist policies - tariffs - we'll get to those this unit, too. Who are we protecting and why? Is that the most efficient use of resources?
(Not really looking for an answer, just one of the points of the article/discussion).
Interesting - makes you wonder, are we looking for a cheaper fuel, or are we looking for a cheaper domestic fuel? As per this article, there's a difference.
Great job!
I really wasn't aware either that there was foreign competition from ethanol. It would be interesting to find out the production and transportation costs to import the corn/ethanol to the U.S. from other countries. Even though I’m all for cutting dependence on foreign oil, ethanol might not be the best option to do so. It takes a huge amount of energy to convert corn into ethanol in the first place, and is probably not doing a great deal for the U.S.’s future energy security (or the economy, or the environment). We’d probably be better off investing in solar, wind, and hydrogen energy in the long run…but hey, that’s just me.
The problem with tariffs and trading in my eyes is politics. When we aren’t getting along with another country (Cuba for example) what do we do? Completely cut off trade. Sometimes our government isn’t concerned with consumers having the least expensive price. Tariffs and protection policies are epitomes of economics vs. politics. Government usually wins...
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