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Here comes the completely integrated energy economy 4 Comments More | Login | Reply /

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  • First of all the ethanol thing is not because it makes economic sense. It is because the US government subsidizes ethanol. And then demonstrates its true priorities by putting a tax on ethanol imports. (It is much cheaper for Brazil to make ethanol from sugar than for us to make it from corn.)

    Secondly I'm not convinced that prices past $100/barrel are sustainable indefinitely. The issue is that when prices pass $60/barrel, it becomes economic to mine oil sands. We have bigger reserves of oil sands than
    • > First of all the ethanol thing is not because it makes economic sense. It is because the US government subsidizes ethanol.

      Subsidies like this are normally (and legitimately) meant to bootstrap industries or counteract temporary imbalances.

      You might subsidise ethanol to boot up an ethanol industry quickly, and you can gradually remove the subsidies later, once industry has improved their methods and can support itself.

      Other examples in a number of countries are subsidies for solar panels or wind generators and so on, to help stimulate the development of and roll out of that thing.

      While it may be effective at $60 to mine tar sands, that figure may not include carbon taxes, or the tar sands simply may not be able to produce oil at the kinds of rates that the Saudis churn out oil.

      Just because it's profitable to start mining it doesn't mean it's profitable at all arbitrary scales.

      > Do you think the wild gamba grass would get cut down?

      Not necessarily. That wild gamba grass is way out in the middle of nowhere, whereas the alternative is to plant all new fields of the stuff next door to the ethanol refinery.

      Why bother to go all the way out to the bush until you've planted everywhere else that is closer and more affordable.

      • Subsidies like this are normally (and legitimately) meant to bootstrap industries or counteract temporary imbalances.

        Thank god that some people still realize this. All those people out there beating free trade drums and getting erections every time they hear "Adam Smith" like to ignore history. The US still has plenty of industries which have become the size they are due to protectionism (witness the rise and fall of the US steel industry). And anyone who naively thinks that tiny and immature African economies can blithely adopt "free trade" on a level footing with major Western powers needs to pay a little more atte

      • While I agree there can be legitimate reasons for subsidies, I really think that the ethanol subsidy is because of the strength of the agricultural lobby in the government, and not for any nobler policy reason.

        On the rest of it, I see there being two alternatives. In one the cost of oil drops. In which case the gamba grass is not cut by people, but some of the other bad things don't happen. In the other the cost of oil stays high in which case it will be worth someone's while to cut that grass. Either a
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