There’s been a lot of press lately about food shortages in the third world caused in part by America and Europe’s ethanol policy, but that’s only the latest reason to oppose ethanol subsidies and mandates. The other reasons are, if less dramatic, just as good and much older.

There is no science to support ethanol, including in the area of “greenhouse gases” for those of you who believe such things are a real problem. At least as compelling is the outrageous economics of ethanol.

I heard someone being quoted in a radio newscast this morning saying that we should be thankful for ethanol because it costs 50 cents per gallon less than gasoline.  He conveniently forgot to mention that that includes more than $1 per gallon in direct and indirect subsidies, and that ethanol provides far lower miles per gallon than gasoline, making ethanol far more expensive to taxpayers even though for all those reasons the price at the pump may be low enough to fool some consumers into thinking they’re getting a good deal.

You can read a more in-depth article which I’ve written on the subject at this link:
http://www.humanevents.com/article.php?id=26348

Senators also want to impose steep penalties on “price gouging” — despite the fact that some 17 separate studies have found it doesn’t exist. The plan amounts to little more than an attempt to impose price controls — a socialist tool dressed up in populist garb.

Democrats hailed their new measure as an attack on “the root causes of high gas prices.” That’s one of the more laughable comments to emerge from the Senate in some time.

As any student who’s taken Econ 101 at the local junior college can tell you, higher taxes don’t encourage production; they discourage it. But Senate Democrats apparently played hooky the day taxes were discussed. They should at least have read the report from their own nonpartisan Congressional Research Service in 2006.

It shows that from 1980 to 1986, the last time the U.S. had a windfall profits tax on oil companies, the results were disappointing. As the chart shows, oil companies were hit hard by the tax. And in line with basic economic theory, they produced less oil, not more.

What’s the real solution? Increase production, decrease regulatory barriers.   As Megan McArdle explains, greater world demand for oil combined with a static supply means that prices are going to rise. And since we’re not going to lower demand any time soon, the challenge is to expand energy production, not grouse and harumph about oil company profits while passing laws that it more difficult and more expensive to fill up our cars.

So you’d think they’d be offering policy proposals designed to lower gas prices. But no, according the AP, Senate Democrats are proposing “a temporary windfall profits tax on oil companies and a rollback of $17 billion in oil industry tax breaks as part of an energy package.”

This is, quite simply, nuts. Making it more expensive to produce and distribute gasoline is simply going to make gas prices go even higher. That’s not rocket science, or complex mathematics; it’s basic economics. The two best ways to make something less expensive are to drive down production costs and increase the available supply. Yet it increasingly seems like our country’s liberal politicians don’t care, or don’t know, or are actively opposed to the actual facts of our energy situation. They’re pushing policies that make gas more expensive to produce, and at the same time refusing to enact policies that would increase domestic supply – offshore drilling, exploration in ANWR, etc. It’s pretty blatant doublespeak: Gas prices are too high, they say – and in the same breath propose to make them more expensive.

The very food-related problems that we see today are much like the hypothesized future ones that were supposed to be caused by global warming. That global warming policy is more likely a contributor than global warming itself is a strong enough reason to rethink this policy.

For this reason, Congress should repeal its current biofuels mandate. In addition, as the Senate soon takes up debate on S. 2191, the major global warming bill, it should heed the biofuels lesson and avoid any measures that may also prove to be more trouble than they are worth.

The farm bill and the energy bill both contain disturbing provisions that make no sense, especially given the food and fuel costs the world is facing. Congress should end mandates and subsidies for corn-based ethanol and allow the market to allocate food and energy. The government is distorting markets, and it should stop making things worse.

Paulson to Visit Treasury Printing Facility in Kansas City Next Week to Observe Stimulus Checks Rolling off the Presses

Washington, DC–Treasury Secretary Henry M. Paulson, Jr. will tour a Treasury Department printing facility in Kansas City next Thursday to observe the first mass production printing and packaging of the 2008 stimulus checks. He will also deliver remarks on the economic stimulus at the Kansas City Central Library.

“By the end of June nearly 130 million stimulus payments should be in the hands of Americans, providing an immediate boost to the economy and helping to create more than 500,000 new jobs by the end of the year,” said Paulson.

The following events are open to the press:

Who Treasury Secretary Henry M. Paulson, Jr.

What Facility Tour

When Thursday, May 8, 8:00 a.m. CDT

Where Kansas City Regional Financial Center

4241 NE 34th Street
Kansas City, MO

The stimulus checks are 100% borrowed money (whatever happened to Democrats’ “pay-go” budget BTW?) …of course, they are financed by real claims from investors through Treasury bonds, but the way the Federal Reserve is debasing the dollar, the metaphor here is pretty remarkable.

The main thing I’d take issue with is his characterization of the net as a public utility. He says that it’s “well established that private property is subject to the law.” That hardly, however, addresses whether or not it should be. And just because private property is subject to some law doesn’t mean it’s subject to any and all laws — it’s not a free pass for whatever regulation can be dreamed up.

Brodsky also takes issue with the characterization of wireless networks as “private networks.”

It is privately owned network, but that’s different. A private network is what a company might have to connect its employees. Wireless has 65.2 million retail customers. That would be some humongous private network.

But the fact that it offers customers the opportunity to pay for some use of its property doesn’t suddenly mean it gives up rights to make decisions about how that property is used. Think of a large retailer doing business on private property. Like a wireless network, it’s privately owned. And like a wireless network, it allows the public to come into its store and make use of its property. But by doing so, the store doesn’t suddenly become a public utility; they can still throw customers out for making trouble, deny them entry if they seem suspicious, and/or refuse to sell particular items if they think doing so will, for some reason, ultimately be better for business. That doesn’t mean they should – and you’ll notice that smart retailers rarely do so – but nor does it mean that these businesses should be legally prohibited from such activity.

And that speaks to my final point, which is that Brodsky seems to assume that all of us who oppose neutrality mandates think neutrality is, plain and simple, a bad thing. That’s simply not the case. Neutrality is, in most cases, a good thing, and if my ISP were to suddenly stop allowing access to my favorite websites, I’d be on the phone complaining in an instant – but to my ISP, not to a Congressman. Because it’s there – in the market, not on the floor of Congress – that these debates ought to be solved.

Cross-posted at AmSpec blog.

- Allow states to petition the federal government to allow oil drilling off the Atlantic and Pacific coasts;

- Repeal a 1-year moratorium on drilling in oil shale regions in Colorado, Wyoming and Utah;

- Repeal previous legislation prohibiting federal agencies from using alternative fuels that emit more greenhouse gases than conventional sources, which has been viewed as a de facto ban on U.S. government use of fuels refined from the Canadian oil sands.

Oil costs are likely to remain high for the immediate future, and in the medium term, they may even rise. There’s simply no way to quickly legislate our way out of this. But finding ways to allow private companies to increase production is certainly one way to ease some of the potential pain at the pump in the future. And it’s certainly a better approach than what Democrats tend to offer:

The Republican plan is heavy on supply-side ideas which could tap up to 24 billion barrels of new oil supply. Democrats have traditionally leaned toward demand-side energy solutions like fuel-efficient cars.

But why do we need to regulate the demand side? As Doug Bandow points out, when prices go up, auto buyers look for cars with better fuel efficiency all on their own. They’re called markets, and they work!

The Federal Reserve’s rescue of Bear Stearns Cos. will come to be seen as its “worst policy mistake in a generation,” a former top Fed staffer said.

The episode will be seen as comparable to “the great contraction” of the 1930s and “the great inflation” of the 1970s, Vincent Reinhart said Monday.

Across the country, ethanol plants are swallowing more and more of the nation’s corn crop. This year, about a quarter of U.S. corn will go to feeding ethanol plants instead of poultry or livestock. That has helped farmers like Johnson, but it has boosted demand — and prices — for corn at the same time global grain demand is growing.

And it has linked food and fuel prices just as oil is rising to new records, pulling up the price of anything that can be poured into a gasoline tank. “The price of grain is now directly tied to the price of oil,” says Lester Brown, president of Earth Policy Institute, a Washington research group. “We used to have a grain economy and a fuel economy. But now they’re beginning to fuse.”

…

Although ethanol was once promoted as a way to slow climate change, a study published in Science magazine Feb. 29 concluded that greenhouse-gas emissions from corn and even cellulosic ethanol “exceed or match those from fossil fuels and therefore produce no greenhouse benefits.”

And how did this mess begin?

In 2005, the Republican-led Congress and President Bush backed a bill that required widespread ethanol use in motor fuels. Just four months ago, the Democratic-led Congress passed and Bush signed energy legislation that boosted the mandate for minimum corn-based ethanol use to 15 billion gallons, about 10 percent of motor fuel, by 2015. It was one of the most popular parts of the bill, appealing to farm-state lawmakers and to those worried about energy security and eager to substitute a home-grown energy source for a portion of U.S. petroleum imports. To help things along, motor-fuel blenders receive a 51 cent subsidy for every gallon of corn-based ethanol used through the end of 2010; this year, production could reach 8 billion gallons.

Ethanol promotion has been a pander issue for both parties.  And it’s not hard to see why. The politics have always seemed like a good idea; corn farmers, not surprisingly, are big, big fans of ethanol subsidies, and other folks weren’t concerned enough about it (plus heard that maybe it stopped global warming or something). Turns out, though, that making policy by listening to the people who stand to get a bigger share of taxpayer money is not always as effective as other approaches, like, you know… looking at the facts.