Washington Post Chides Obama Over Energy

by Brian McGraw on March 28, 2011

in Blog, Features

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In an editorial cleverly titled, “Drill, Brazil, Drill says the U.S.The Washington Post joined in the growing public displeasure over President Obama’s public support for the Brazilian oil industry, which seems to be rising at the expense of administration support for the oil industry in the United States.

As CEI’s Myron Ebell pointed out last week:

This is the same President who has spent the last two years doing everything he can to reduce oil production in the United States.  Cancelled and delayed exploration leases on federal lands in the Rocky Mountains; the re-institution of the executive moratorium on offshore exploration in the Atlantic, the Pacific, most Alaskan waters, and the eastern Gulf of Mexico; the deepwater permitting moratorium and the de facto moratorium in the western Gulf.  The result is that domestic oil production is about to start a steep decline.

The editorial also mentions the tariff on ethanol. Trade restrictions are bad policy. However, the case for Brazilian ethanol is slightly more complicated than that. If Brazilian ethanol were imported to the U.S., it might displace some ethanol production that is occurring in the U.S. as historically Brazilian ethanol has been cheaper. This would be fine.

However, much of the consumption of ethanol in the United States is because of the Renewable Fuel Standard. Corn ethanol production will be peaking near its current level of production, because it does not satisfy the cellulosic ethanol nor the advanced biofuel requirements of the RFS. It would need to have much higher GHG emission reductions (as an aside, the ethanol industry is lobbying to change the language of the bill such that corn ethanol would qualify).

Allowing Brazilian ethanol into the U.S. would allow it to fill a steadily increasing “Advanced Biofuel Requirement” in the RFS. If this Advanced Biofuel will be produced expensively in the U.S. at all cost (or the EPA decides to allow corn ethanol to qualify), then the case for allowing cheaper foreign sources of ethanol into the U.S. is compelling. However, if the EPA will continue to cross out mandates when they are impossible to meet, the tariff might actually keep Americans from being forced to buy increasing quantities of a product that couldn’t pass the market test. This depends on the behavior of the EPA in terms of their assessment of how difficult it would be for refiners to meet the mandate.

The Washington Post is correct to push Obama on supporting more production in the U.S., especially with unemployment still so high. The case for ending ethanol is more complicated, overshadowed by government policy forcing Americans to use it while filling up their cars.

bobrgeologist March 28, 2011 at 11:14 pm

Thank you for proving the incompetence of your administrator

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