Really Bad Idea: Tax breaks for companies that make, and consumers who buy, ethanol-powered vehicles.
The normally-sensible Cliff May proposes a tax break for companies that make, and consumers who buy, ethanol-powered vehicles. Marlo Lewis, senior fellow in environmental policy at the Competitive Enterprise Institute, “fisks” May on National Review’s Planet Gore blog:
“Cliff argues that the problem with gasoline is there is no competition in the motor fuel market. When you go to the pump, you can choose between gasoline and gasoline, and when you buy a car, you can choose between one that runs on gasoline and another that runs on gasoline.
Cute, but what Cliff is describing is not the absence of competition but the results of competition. Ethanol as a motor fuel has been around as long as petroleum-based gasoline. In fact, back in the 1920s, Henry Ford supposedly predicted that ethanol would be the “fuel of the future.” The marketplace proved him wrong, and for what turns out, in hindsight, to be fairly obvious reasons. None of the alternatives to gasoline perform as well in terms of cost, portability, and energy density.
Biofuels already get billions in subsidies, tax breaks, and mandates—-an estimated $92 billion during 2006-2012. Were it not for the 51-cent per gallon tax break refiners get to blend ethanol in the nation’s motor fuel mix, a national market for ethanol would not even exist. Gasoline continues to dominate the motor fuel market because it still blows away the competition. I’m afraid that what Cliff laments as lack of competition is simply a competitive outcome he wishes were otherwise.” …