By Ghost of John Brown
A few weeks ago, I wrote about how rising oil costs must be making the White House pretty happy - click here. Now I'm seeing evidence of it. I drove by one of the local gas stations and noticed that E85 fuel (85% ethanol) is selling for $2.89/gallon, whereas good old gasoline is selling for $3.79/gallon. I have one of those big, honking trucks (made by Chevy) that is a "Flex Fuel" vehicle, meaning that I can use either regular gas or E85, so I've looked into it. If I wanted to, I could save a lot of money with E85, now that oil prices are on the rise.
When I've tested it on my own truck, I get about 15% less miles to the gallon with E85 than I do with Regular Unleaded. Some report even a lower fuel efficiency with E85, butit largely depends on if your vehicle is pre-2002 or if it is a more recent vehicle. On my big, honking truck, it cost me a cool Franklin to fill up the other day with regular unleaded. If you follow the math, at the prices of $3.79 for unleaded and $2.89 for E85, it would only cost me $89.71 to drive the same number of miles that I could by spending that $100 on unleaded. A nice savings of $10.29.
So, if you are one of those pointy heads in the White House that is just dying to break us from using those wicked fossil fuels, you've got to be doing cartwheels right about now. However, there's a catch.
The large scale conversion of corn into Ethanol drives food prices higher. Just so you don't think I'm not environmentally friendly enough and I'm making that up, I'll use a link from a "lefty" think tank to make my point - click here. The author was worried about food prices being impacted back in 2008. What is the situation now?
In the last few months, corn prices have been pegging up at a rapid pace, closing up 23 cents on Monday to $7.59 on May contracts. Food prices are up all over the world, and our nation's energy policies as they relate to ethanol are one of the biggest culprits. Add to the fact that the Federal Reserves loose money policy is leading to inflation concerns, and we have one hell of a potential problem.
Source: Trading Charts
On top of all of that, Ethanol is actually not that good for the environment.
As with a lot of things, we are faced with these problems because the government meddles. They want to please farmers in Iowa because it is one of the first Presidential primaries and we have ethanol subsidies. They want everyone to own a home, even though they can't afford it, and they put in place policies that force banks to loan money to them and we had the housing bubble. They stifle domestic oil production, coal plants and nuclear construction (yes, I'm for nuclear despite what is happening in Japan), and we are held hostage to middle east oil.
It's time to get government out of the business of picking winner and loser, because they don't do a very good job at it.