Biofuels, Oil, and Corvettes: I Like Them All

Biofuels are great, and they’re only going to get better.  If you’ve been reading my posts you know I’ve had quite a bit to say about ethanol in particular, but I don’t think it’s the answer to all our fuel problems.  At least not in the short-term.  The United States can produce its fair share of oil too, and I don’t have a problem with that.  I think there is a camp in the biofuels industry that doesn’t like petroleum-based fuels too much, and vice versa for some in the oil industry.  What’s wrong with pushing both industries creating jobs and tax dollars?

How can I be for two what seem to often be opposing ideas about how we fuel our vehicles?  I’m not anti-oil because I just don’t have a problem with it.  I don’t buy the global warming argument.  It’s climate change now I guess, but that doesn’t matter.  Sure burning fossil fuels isn’t improving the environment, but I don’t believe it’s destroying it either.  The old internal combustion engine isn’t what is used to be.  I’m a bit of an automotive enthusiast so let’s look at the modern Chevrolet Corvette from the then-new C5 in 1997 up through today’s C6.  Off the top of my head the car’s antiquated American pushrod V8 with roots dating back to the 1950s started in 1997 with 345hp and has progressed since then with engines making 385hp, 405hp, 430hp, 505hp, and the world-beating ZR1 with 638hp.  Old gas guzzling technology and an impractical car to boot making more power all the time for no good reason.  What a waste.  Well, look again.  The highway gas mileage of these cars has been in the mid-twenties over all these years and power increases.  I have even read of owners seeing as much as a 32mpg average on the highway.  That’s better than anything I’ve ever owned!  Corvette has even been a listed as a low emissions vehicle.  All in all not to shabby for America’s sports car.  That being, said we aren’t all going to be buying Corvettes for our daily drivers, but it shows how efficient we can be with oil even in a performance car.  Hybrid technology is taking off, even in cars that I would drive.  You won’t catch me in a Prius, but what about an Ecoboost F-150?  Take a quick look at the cars on Ford’s website.  They have a host of vehicles that get up to 40mpg on gas.  The internal combustion engine still has a lot to offer in terms of efficiency.  Just like in agriculture new methods and technology will allow us to do more with less.

Before I go off and turn this into an automotive blog I should probably get back on track here.  If I’m a corn farmer, and right now most ethanol production is coming from corn, why would I be for oil?  Because it’s good for the country.  Both sources of energy are.  If we can fully embrace both oil and biofuel production within our own borders it will go a very long way towards producing new and stable jobs in a time when we desperately need them. 

Lately politics have been working against energy independence on both fronts.  Personally, I think it’s absolutely ridiculous when “Big Oil” execs get trotted out in front of Congress like they were a couple of weeks ago so politicians can make them out to be the bad guy when gas prices are high.  Give me a break.  Oil companies can control the price of a barrel of oil no more than I can control the price of a bushel of corn.  When you’re dealing with commodity markets, you are dealing with a truly global economy which is at the mercy of an endless amount of variables.  It probably doesn’t help that much of the world’s oil is owned by governments.  And so what if oil companies made huge profits recently?  What is your reward for being good at what you do and running a successful business, employing a whole industry of workers?  You get criticized by politicians and threatened with investigations of price gouging and holding back fuel supplies.  Then we get into the big mess with a moratorium on drilling in this country while we go down to Brazil and pay them $2B to perform the same type of drilling, and then offer to be their number one customer.  What!?  I guess deep water drilling isn’t so bad when it’s not in your water.

A similar thing is happening on the biofuel side.  With all the talk about cutting spending in Washington it looks like the Volumetric Ethanol Excise Tax Credit (VEETC) may be on the chopping block.  The tax credit allows for a $.45 credit from the federal government for every gallon of ethanol.  This credit goes to the blender.  Unlike a lot of people think, it does not come to me if I choose to deliver corn to an ethanol plant.  I’m all for cutting spending, but this is one place where government can actually be helpful.  Providing incentives for young industries to get a foothold.  If the industry really takes off and becomes viable on its own it will only help the economy.    However, there is an idea being floated around that I like more than VEETC, and I like it because I think it can get us away from these government mandates of the volume of renewable fuels that need to be produced.  I don’t want anyone telling me what I have to produce or consume, so let’s have the free market decide.  Why not take the money that is being used for this tax credit and give gas stations an incentive to install blender pumps?  Now the consumer has more of a choice at the pump.  Here’s the beauty of that situation.  If fuel choices are readily available to consumers and they don’t vote for biofuels with their dollars, then so be it.  Time to move on at that point.  I don’t think that will happen with second generation biofuels and algae coming online in the future.  If they embrace them, then that’s great!

Why do I want both of these industries to succeed?  Because if the United States can become energy independent that will fuel our success long into the future.  Will it lower energy prices?  That I do not know, but it will free us in more ways than just having to buy imported oil from unstable regions of the world.