Let the ethanol debate begin

A sign advertises the availability of E85 fuel at a gas station January 27, 2006 in Chicago, Ill.

TEXT OF INTERVIEW

BOB MOON: Is what we need a hefty dose of grain alcohol? Is it just moonshine or is it a viable way to reduce gasoline consumption? President Bush made energy independence a primary focus of his State of the Union address last night. He's suggesting we need cut our use of gasoline by 20 percent in the next decade, primarily through alternative fuels such as ethanol. This morning, the debate begins. And some experts already beg to differ. Jerry Taylor is a senior fellow at the Cato Institute, a Washington research group that champions limited government and thank you for joining us.

JERRY TAYLOR: Thanks for having me.

MOON: So let's talk first about the President's emphasis on energy security and independence and he wants to boost our use of ethanol. Is that really the way to energy independence?

TAYLOR: Well it would certainly make us less dependent on trade for our energy. But if we took al the corn that we produced in the United States last year and dedicated it to ethanol production, then we'd be able to reduce U.S. gasoline consumption by all of about 12 percent. So the fact is, if we want to make significant inroads on gasoline, we'd have to harvest a heck of a lot of corn.

MOON: What about energy security? The President proposed boosting the strategic petroleum reserve. Is that a good idea? Bad idea?

TAYLOR: I think it's a terrible idea. The strategic petroleum reserve is a complete boondoggle and a burden on the taxpayers. It's sort of a buy-high-and-sell-never policy. The idea was that the U.S. would stockpile oil for in times of emergency, but it turns out that the federal government usually buys oil at its greatest pace when prices are highest because that's when fears of disruption are highest so that's when we buy. And then we generally never sell, no matter what the incident in any consequence. And finally I don't think it's the government's business to be manipulating commodity markets. What makes anyone think that the federal government is a good actor when it comes to managing commodity stocks and knowing when to buy efficiently and knowing when to sell efficiently?

MOON: This isn't as simple as just stocking it away for a rainy day huh?

TAYLOR: Well what the federal government does is they stock it away for a rainy day that never seems to come because there's always the threat of a rainier day in the future.

MOON: Jerry Taylor of the Cato Institute, thanks for your views.

TAYLOR: Thanks for having me.

About the author

Bob Moon is Marketplace’s senior business correspondent, based in Los Angeles.

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