Washington, D.C. (Rightcommentary) On August 8, 2005, President Bush signed the Energy Policy Act of 2005 (H.R. 6) into law. The comprehensive energy legislation includes a nationwide Renewable Fuels Standard (RFS) that will double the use of ethanol and biodiesel by 2012.

President Bush said, during the 2006 State of the Union address, “America is addicted to oil, which is often imported from unstable parts of the world.”

I don’t disagree, Mr. President, but, let’s look at some of the “wonders” of ethanol as a replacement for gasoline.

Ethanol contains water that is quite expensive to remove in its entirely - making it anhydrous. Moreover, anhydrous ethanol is unstable (it likes to become vapor at normal temperature and pressure - just as rubbing alcohol evaporates quickly). As such, internal combustion engines designed to burn octane (gasoline) cannot burn ethanol in a pure form. Only SAAB has developed a car that can run on fuel that is mostly ethanol. Most fuel blends at local gas stations have a blend of ethanol usually of about 5 - 15 % on the high end. In comparison, the SAAB Ecopower sedan can burn fuels that is only 15% octane - 85% ethanol. Thus - ethanol won’t be readily suitable for most cars without significant retrofitting - that will cost billions of dollars.

The water content of ethanol also risks pipeline corrosion and thus must be shipped by truck, rail car or barge. Anhydrous ethanol is unstable and difficult to store. Pure ethanol (E100 - with some water in it) can be stored, however, it is corrosive and ultimately is difficult to store for the long term. Gas stations, storage terminals, and even fuel trucks, over time, would need to have their tanks replaced. Since it is so difficult to ship and store, distribution of ethanol is more expensive than current oil/gas pipelines and restrict how much fuel can efficiently travel to distribution nodes.

Ethanol is 20 to 30 percent less efficient (in terms of kaboom per unit) than gasoline, making it more expensive per highway mile. It takes 450 pounds of corn to produce the ethanol to fill one SUV tank. That’s enough corn to feed one person for a year. Plus, it takes more than one gallon of fossil fuel — oil and natural gas — to produce one gallon of ethanol. After all, corn must be grown, fertilized, harvested and trucked to ethanol producers — all of which are fuel-using activities. And, it takes 1,700 gallons of water to produce one gallon of ethanol. On top of all this, if our total annual corn output were put to ethanol production, it would reduce gasoline consumption by 10 or 12 percent.

Also add into the mix that the price of corn affects the price of just about everything that at one time or another had legs. Beef, chicken, and pork have all increased rapidly in the last two years because of the demand for corn. Most corn in the United States is still grown for feed, however, the amount of corn used for “fuel” has more than doubled in the last 7 years - from 500 million bushels, to 1.3 billion bushels. The amount of ethanol produced increased in about the same linear function - so there is no net energy savings through economies of scale.

The fact that the U.S. is the world’s largest grain producer and exporter means that the ethanol-induced higher grain prices will have a worldwide impact on food prices. We are presently seeing this in the wake of temporary shortages in rice, soybeans, and corn, around the world. While US farming will undoubtedly expand to meet the demand - world wide food costs will remain undoubtedly higher.

Ethanol is so costly and inefficient - the only way a free market produces it - is through government subsidy. That’s why Congress has enacted major ethanol subsidies, about $1.05 to $1.38 a gallon, which is no less than a tax on consumers. In fact, there’s a double tax — one in the form of ethanol subsidies and another in the form of handouts to corn farmers to the tune of $9.5 billion in 2005 alone.

There’s something else wrong with this picture. If Congress and President Bush say we need less reliance on oil and greater use of renewable fuels, then why would Congress impose a stiff tariff, 54 cents a gallon, on ethanol from Brazil?

Brazilian ethanol, by the way, is produced from sugar and is far more energy efficient, cleaner, and cheaper to produce than ethanol from corn. It’s nothing short of protectionism.

It’s easy to understand how the public, looking for cheaper gasoline, can be taken in by the call for increased ethanol usage. But politicians, corn farmers and ethanol producers know they are running a cruel hoax on the American consumer. They are in it for the money. The top leader in ethanol production is Archer Daniels Midland (ADM). In addition to being the “Super Market to the World, ” I guess they also want to be the world’s gas station.

Now - being a Republican and a conservative - don’t mistake me for somehow saying companies shouldn’t earn profits. They should. However, what is happening here is a cabal between the uneducated in Congress, the shrewd in Agriculture, sticking to the SCREWED taxpayers and consumers. Corn-gas just doesn’t work economically. It costs more to make than it provides - and the collateral problems it brings are not insignificant.

In short - as much as I have joked in the past of being “The Saudi Arabia” of corn - the reality is that we really can’t grow ourselves out of our dependence on oil. We’ll have to find alternative fuels and efficiencies that are market-driven and ultimately produce a greater net benefit than the costs to provide them.

Reminds me, recently, of some testimony I saw in the Congress. The CEO of Exxon was being berated by a Senator - I think it was Feinstein - about why Exxon didn’t do “green” stuff - ethanol, electrical, solar… etc.

In what has to be the best line I’ve seen in testimony in a long time… the CEO waited until she was done and said, “Well Senator, we don’t do that stuff, because, we’re in the OIL business. We extract and refine OIL for people - that’s what we do.”

Classic!