February 26, 2006

SO RAISE GAS TAXES A DOLLAR:

Greener fuel or corny ploy? (MARY WISNIEWSKI , 2/26/06, Chicago Sun Times)

Ford is promoting E85 stations through a partnership with ethanol producer VeraSun. Ford will help offset the cost of converting gas pumps to E85, while VeraSun provides branding and marketing.

GM is promoting E85 this year with its folksy "Live Green. Go Yellow" ad campaign. On its Web site, shaggy-headed young people stand in fields of corn, talking about ethanol while a jangly guitar plays in the background.

Biofuels are also getting a push from the White House, with President Bush asking for $150 million to promote biofuels in his fiscal year 2007 budget. One of the goals of the initiative is to accelerate research to make cellulosic ethanol -- ethanol made from non-food based matter such as cornstalks and switchgrass -- cost-competitive by 2012, potentially displacing up to 30 percent of the country's current fuel use by 2030.

Terminals that receive ethanol and distribute it to retail gas stations receive a federal income tax credit of 51 cents per gallon, according to the National Ethanol Vehicle Coalition. Most gas sold in the Chicago area contains 10 percent ethanol.

On average, retail E85 is priced 25 cents to 30 cents cheaper than regular unleaded gasoline, according to Jim Tarmann, field services director for the Illinois Corn Growers Association.

The cost to use E85 is actually higher when E85's lower mileage is taken into account.

The E85 price at Gas City was discounted at $1.99 -- 50 cents lower than regular unleaded gasoline at the station. But using the Energy Department's mileage estimate, gas would have to be 80 cents higher for E85 be an equal value.

The NEVC's mileage is more optimistic -- figuring E85 mileage at 5 perecent to 12 percent less, depending on the vehicle and driving conditions.

Posted by Orrin Judd at February 26, 2006 9:04 AM
Comments

Doesn't have to be a tax. Just bill the producers for the costs we pay for subsidizing gasoline as a part of their expense of production. That would include what we're spending in the entire Middle East.

Posted by: Genecis at February 26, 2006 3:44 PM
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