Because of the federal ethanol mandates passed by a bipartisan Congress in 2007 (imagine that—subsidies for Republican farmers that pleased some environmental groups because it wasn't fossil fuel) energy companies been required to blend increasing amounts of the fuel made from corn into gasoline mixtures. In a proposal released last month, the department proposed the requirement for next year be less than what it required for the past two years. It also, in a report in the Wall Street Journal, lowered the required amount of advanced biofuels.
Thanks to the boom in natural gas and oil production sparked by the improved fracking technology, the demand for biofuels has dropped substantially. In addition, the amount of the alternative fuels blended into gasoline, under the mandate, potentially could damage engines. The ethanol mix already has wrecked havoc with small engines in my family to the point that I am now buying ethanol-free fuel for $7 a quart or $28 a gallon—Thanks Uncle Sugar. It's far more economical to do that than repair equipment I only use occasionally.
It would be great to see Congress wise up and eliminate the mandates so the market can find its own equilibrium. Thinking environmentalists have consistently pointed out that producing ethanol from corn is a net negative for the environment, while other people have pointed out how the ethanol mandate has driven up prices for corn used to make food or feed livestock.
The embrace of electric vehicles, despite the abundance of natural gas and oil now being produced domestically, is part of the broader thrust to reduce emissions. That's driven the California Public Utilities Commission to require energy companies to invest in storage technologies so the electrical grid can be evened out. Relying on solar and wind just doesn't work—ask the folks in Germany where electrical rates have soared since Chancellor Angela Merkel declared the country would eliminate its nuclear power in favor of wind and solar. Energy companies are actually burning wood and coal in their power plants to ensure steady electrical power.
In California, two inconvenient facts have been ignored:
1. A study issued a couple of years ago found that to produce the electrical power necessary to meet the demands of an all-electric vehicle fleet and other mandates would require a new nuclear power plant every two years. Have you seen any—of course, if the state allows companies to aggressively pursue fracking in huge reserves, then clean-burning natural gas plants could fill that gap.
2. The state mandate in AB 32 coupled with the executive order by former Gov. Arnold Schwarzenegger requires the reductions in greenhouse gases by 2020, but does not mandate a number for 2050. A Lawrence Berkeley lab study showed that existing or newly emerging technologies should be enough to meet the 2020 goal, but hitting even 60 percent by 2050 would require huge changes—among them demolishing buildings or retrofitting them to high efficiency standards; vehicles all would be much more efficient and industrial processes would have to change dramatically as well as anything possible would be powered by electricity.
In other words, the economy, as we know it, must be overhauled entirely. This scientific study did not ask the economic question.
Politicians and regulators joust with climate windmills without paying any attention to the ramifications to the economy. You can see if with the air boards and the trash boards—goals are raised to increasingly aggressive level and common sense seems to be a missing element.
