An alcohol-based economy

02Feb06

The idea of “alternative fuels” has burst into the mainstream media in light of the President’s emphasis on energy independence in the State of the Union address this week. While this is not a topic we would normally discuss the implications of a real push towards alternative fuels has implications for the economy, geopolitics and the stock market itself.

James R. Healey in the USA Today asks the question – “Is ethanol the answer?” At this point in time ethanol and E85 have too small a footprint to make a real dent in oil imports. However scientific and market dynamics seem to be pushing E85 into the mainstream. Healy notes the roadblocks,

Despite the barriers, the ethanol and auto industries are keen on E85’s promise. “E85 is going to be a much more significant market for us down the road,” RFA’s Dinneen says. “But you have to get more vehicles on the road that can use E85, and you need more outlets.”

Robert Zubrin at American Enterprise Online lays out the case for “the alcohol solution.” According to Zubrin it makes no sense for the U.S. to continue to subsidize our enemies through our continued dependence on foreign, i.e. Mideast, petroleum. With oil at current prices alcohol based solutions now are economically feasible. Given certain standards it is possible to make the switch to alcohol based fuels. (Link via Instapundit.com)

ProfessorBainbridge.com is skeptical about ethanol in part because he views it as a political sop to all the corn farmers in Iowa and the Midwest. However another form of alternative fuel that can be created by mixing algae with CO2 emissions is in the mix.

At least the debate has started. Hopefully something will come from a national debate on alternative fuels. If you are interested in learning more about the current standard alternative fuel, E85, you can read the Wikipedia entry or an industry-supported site.




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