Passing Gas.

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Author: Koffler, Daniel

Energy bill giveaways

PRESENTED LAST summer with the Energy Policy Act of 2005, only 12 senators dared vote against a measure that promised to "ensure jobs for our future with secure, affordable, and reliable energy." The cost of all that assurance: $36 billion over five years. In addition to authorizing a $6 million program to promote bicycle use, the energy bill mandates that the national gasoline supply contain 8 billion gallons of "renewable fuel" (i.e., ethanol) by 2012, and more as consumption increases.

Ethanol-blended fuels are considerably more expensive to produce and risky to transport than nonblended fuels, a cost that will undoubtedly be passed on to consumers. Ethanol also happens to be derived from corn, making the requirement--by pure coincidence--a huge boon to the subsidy-soaked agricultural sector. Americans who avoid higher prices at the gas pump may encounter them at the grocery store; the Congressional Budget Office projects a 10 percent increase in corn prices between 2007 and 2015.

The "secure, affordable, and reliable energy supply" plank of the bill consists of various targeted tax breaks and credit assistance programs. Among the bill's many allocations are $3.8 billion toward putting hydrogen-powered automobiles on the road by 2010. (The National Academy of Sciences expects it will be 20 to 30 years before there is a commercially viable hydrogen-powered car.) Last but by no means least, the bill offers loan guarantees of up to $250 million per project to produce fuel from cellulosic biomass and cane sugar. The Energy Policy Act places no limit on the number of projects that could receive such assistance. The fuel to be produced is--of course--ethanol.

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By Daniel Koffler