Tuesday, June 03, 2008
Ethanol, subsidies and more
I'm not a fan of corn based ethanol. One of my main reasons is that it requires a lot of subsidies to make it viable. It is also not that efficient in producing energy as opposed to other forms of ethanol. The subsidies create distortions in the marketplace and allocate resources in an inefficient manner and we could be investing in more effective solutions to solve energy problems. I found a great article that highlights the amount of subsidies given to Iowa in particular. $4 billion in farm subsidies. They may not all be related to ethanol but in a period of rising grain prices but I'm not sure if all these subsidies are really necessary now. I guess it is just more proof that government regulations can be very misguided. Maybe we'll see some changes in policy.