Fuel Pump Folly

Our local Fox news channel just reported on why it is that even though oil prices are falling, gas prices at the pump are rising. People are mad about it and rightfully so, the United States is awash in so much crude oil that they don't have places to store it. There are supertankers stacked up in the ports and demand is still lower than this time last year because of the poor economy and job losses.

So the real reason we are paying more at the pump is because as the economy sank further into the abyss during the fourth quarter of 2008, Corn prices collapsed. Ethanol made from corn is mandated in all seasonal gasoline fuel blends by our illustrious government. Our government has tried to sell the idea on the free market that ethanol from corn would help wean our nation off of foreign oil. They incentivized corn based ethanol production, and "created" an artificial market for it. It is an artificial market because they can not create demand, so they have subsidized production instead.

It is not as efficient as a fuel for the internal combustion engine because it has a much lower energy density (it takes more of it to generate the same power). It is an end run around the free market system. No one actually wants "cornahol" for a fuel or a fuel additive (it has consistently cost more at the pump than gasoline, since oil has tumbled). And accordingly, a few of the major manufacturers of corn based ethanol went bankrupt and got out of the business. So now there is a shortage of the mandated ethanol for gasoline fuel blends. So once again our own government has proved right the theory of "unintended consequences" by hurting those who can least afford it; the poor and middle class. As prices of food and everything else is continuing to rise steadily, so does gasoline even though it really should not be. Experts say that we should be paying around $1.50 per gallon right now.

Another area that they did not touch on but still angers the heck out of me is the "splash and dash" subsidy scandal, where gasoline refined in other countries is blended with ehtanol in tankers at United States ports, and the outbound tankers then qualify for a huge United States government subsidy even though the they are going to foreign markets for sale. Yet another way that our government is giving our tax dollars away to foreigners who mostly despise us. Way to go Congress.