Brave New World, in a Nutshell

I have previously shown that biofuel subsidies are inefficient and unnecessary, raise food prices (disproportionately disfavoring the poor), and squander arable land, while stimulating a lobby demanding ever-increasing government handouts. So there's no surprises in the Administration's next step, outlined in a March New York Times story:

Burdened by falling gasoline consumption and excess production capacity, ethanol producers appealed to the government on Friday to raise the 10 percent limit on ethanol in most gasoline blends to as high as 15 percent.

Ethanol plants are closing across the country and some ethanol producers are declaring bankruptcy. The appeal will require the Obama administration to decide whether to increase federal support for the industry, which has already benefited from an array of subsidies, tax credits and Congressional production mandates.

"Approving the use of ethanol blends up to 15 percent is a necessary and positive step," said Bob Dinneen, president of the Renewable Fuels Association, an industry lobbying group, "to ensure the full potential of a robust domestic ethanol industry."

The Environmental Protection Agency and the Energy Department have been testing higher ethanol blends. The E.P.A. has nine months to review the request, but it could decide before that to increase the blend cap slightly, to 12 or 13 percent. . .

Food producers are also lobbying against raising the blend limit. They say any increase in domestic production of ethanol will divert corn from use as food and animal feed, raising food prices for consumers.

At the end of 2007, Congress mandated the doubling of corn ethanol use, to 15 billion gallons, by 2015. At the time, gasoline demand was increasing, but now it is declining because of the slowing economy.

Should current gasoline consumption levels persist and the blend level remain at 10 percent, demand at the nation’s gas pumps would be inadequate to absorb the 15 billion gallons of ethanol that refiners are required to blend.

Ethanol producers also argue that without higher blend levels, there will be no room for the development of advanced biofuels, like ethanol made from wood chips or biological waste. Congress has set a target of using 21 billion gallons of that type of ethanol and other biofuels by the year 2022.

The industry has a capacity of 12.5 billion gallons a year, but so many plants have been idled that production is expected to reach only about 10 billion gallons this year.

Ok, I hear you say, but what about reducing American's dependence on foreign oil? Barely and at a huge cost, says the Washington Times:

The benefits are overstated. According to the EPA, reduction in foreign imports will result in $3.7 billion in "energy security benefits" at the expense of $18 billion in increased fuel costs by 2022.

Again, this is how Obama "restore[s] science to its rightful place."

See also the latest on solar subsidies.

(via Coyote Blog, The Corner)