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Why does Ethanol additives cause gas prices to rise?

Posted on 04/27/2006 11:21:18 AM PDT by John Geyer

Edited on 04/27/2006 11:47:26 AM PDT by Admin Moderator. [history]

I would assume that ethanol, being produced by fermenting American grown corn into a useable fuel, would make gas cheaper, not more expensive. Instead of making the price of gas rise, I would believe that it would fall because we are using a renewable, home grown form of fuel. I guess I'm an idiot for not understanding the reasons behind this, but I ask for someone with more experience to explain it for me. I was telling my father how ethanol would make gas cheaper, and now I feel like a complete moron. Help me understand.


TOPICS: Your Opinion/Questions
KEYWORDS: energy; ethanol; gasprices; metalkpretty1day
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To: thackney
My problem is ... with the dollars. We can call it what ever you would like. But it is still wrong.

On the contrary, I think the tax exemption is right. What's wrong are the income taxes on everyone else.

101 posted on 04/27/2006 2:30:19 PM PDT by newgeezer (Just my opinion, of course. Your mileage may vary.)
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To: tiger63
Use this stuff in an older car the seals, gaskets and your rubber fuel lines go south. The "in tank" fuel filter is the first thing to go as the injection system becomes clogged. Your auto shop will love this!

Total BS.

I've been burning ethanol blends in vehicles of every age and description for many years, and what you're claiming just ain't true.

102 posted on 04/27/2006 2:34:14 PM PDT by EternalVigilance (Being conceived is NOT a capital offense!)
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To: newgeezer

It appears to be more than just my definition.

Federal Energy Subsidies
Direct and Indirect Interventions in Energy Markets
http://tonto.eia.doe.gov/FTPROOT/service/emeu9202.pdf

"There is no universally accepted definition of what constitutes a subsidy. A typical textbook definition of a subsidy is a transfer of economic resources by the Government to the buyer or seller of a good or service that has the effect of reducing the price paid, increasing the price received, or reducing the cost of production of the good or service. The net effect of such a subsidy is to stimulate the production or consumption of a commodity over what it would otherwise have been."

Types of Energy Subsidies Reviewed
• Provision of energy and energy services.
• Provision of loans.
• Tax exempt interest on debt.
• Assumption of environmental, safety, and health liabilities.
• Research and development.
• Provision of Regulatory Services.


103 posted on 04/27/2006 2:35:04 PM PDT by thackney (life is fragile, handle with prayer)
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To: Pukin Dog
The answer is complicated, but the short version is that it takes more energy to produce Ethanol then Ethanol itself gives back in the form of fuel.

Wrong.

Like many, you fail to take into account the fact that a large portion of the corn in the ethanol production process ends up as cattle feed.

I don't know why so many are so intent on continuing to push this sort of false information.

I guess you'd rather that those literal mountains of Midwestern corn would be sold for a pittance and shipped to China to have value added.

I'd rather burn corn than Saudi oil, thanks.

104 posted on 04/27/2006 2:38:42 PM PDT by EternalVigilance (Being conceived is NOT a capital offense!)
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To: John Geyer
Why does Ethanol additives cause gas prices to rise?

Because corn whisky is more expensive than gasoline?
105 posted on 04/27/2006 2:40:43 PM PDT by R. Scott (Humanity i love you because when you're hard up you pawn your Intelligence to buy a drink)
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To: newgeezer
A tax exemption is not a subsidy.

The American Heritage® Dictionary of the English Language, Fourth Edition, disagrees with you.

1. Monetary assistance granted by a government to a person or group in support of an enterprise regarded as being in the public interest.

2. Financial assistance given by one person or government to another.

Tax breaks are monetary or financial assistance. Having ethanol users not pay their fair taxes for the roads on which they drive is something we can agree to disagree upon.

106 posted on 04/27/2006 2:44:49 PM PDT by thackney (life is fragile, handle with prayer)
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To: Iowa Granny
We need a motto. How about...

Ethanol: Don't worry, we'll grow more!

;-)

107 posted on 04/27/2006 2:45:54 PM PDT by EternalVigilance (Being conceived is NOT a capital offense!)
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To: thackney
The Saab 9-5, on gasoline produces 260 hp with 258 lbs of torque. By just filling up with e85, and making no other adjustments, the engine will generate 310 hp and 325 lbs of torque. If you stomp on the throttle, the gasoline powered vehicle will go from 0 - 60 in 6.9 seconds, while the ethanol powered car makes it in a little under 6 seconds.

To compare apples to apples, you would need to back off the accelerator in the car on ethanol fuel so that its performance matched the 6.9 second time.

I never have learned how to post active links, but if you Google on "ethanol fuel challenge" you can find some interesting information on retuning flex-fuel engines to optimize mileage.

108 posted on 04/27/2006 2:47:06 PM PDT by Mr. Lucky
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To: thackney
Having ethanol users not pay their fair taxes for the roads on which they drive is something we can agree to disagree upon.

Hmmm...those words set off my Liberal Detector.

109 posted on 04/27/2006 2:47:34 PM PDT by EternalVigilance (Being conceived is NOT a capital offense!)
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To: EternalVigilance
I've been accused of a lot of things, but rarely a liberal.

I do not care for the government choosing one product over another in a competing market. I like it less when the not chosen one provides my income.

110 posted on 04/27/2006 2:49:57 PM PDT by thackney (life is fragile, handle with prayer)
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To: Mr. Lucky
but if you Google on "ethanol fuel challenge"

Thank you.

Google "ethanol fuel challenge"

111 posted on 04/27/2006 2:52:24 PM PDT by thackney (life is fragile, handle with prayer)
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To: thackney
I do not care for the government choosing one product over another in a competing market. I like it less when the not chosen one provides my income.

Sorry, but the growers of food have been the tools of national security policy all the way back to Joseph and the Pharoahs.

That's unlikely to change, short of Free Market Utopia.

The price of aiming for that Utopia; the complete loss of national sovereignty; is far too high, in any case.

So, we'll go on being protectionists in practice, as long as we care to continue as an independent nation.

112 posted on 04/27/2006 2:56:57 PM PDT by EternalVigilance (Being conceived is NOT a capital offense!)
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To: thackney

That is, unless you want American agriculture to go the way of American manufacturing...


113 posted on 04/27/2006 2:57:32 PM PDT by EternalVigilance (Being conceived is NOT a capital offense!)
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To: Mr. Lucky
Would you give your opinion of this data?

2006 Flexible Fueled Vehicles

Choose ethanol-gasoline vehicles.

114 posted on 04/27/2006 2:57:39 PM PDT by thackney (life is fragile, handle with prayer)
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To: thackney
It appears to be more than just my definition.

I guess we can keep beating this dead horse.

a subsidy is a transfer of economic resources by the Government

Precisely. Here, there is no transfer of economic resources by the government.

At any rate, I don't see how anything you quoted defines 'subsidy' so as to include the tax exemptions enjoyed by the ethanol industry. The government has decided to not tax something. Instead of grousing about it, I'd think a conservative might find reason to rejoice.

Back to the definition, I found this relevant sentence in that document:

Tax policy can achieve subsidy-like effects in energy markets.

Note the careful wording, "subsidy-like"; in other words, although the effect may be subsidy-like, it's not a subsidy.

115 posted on 04/27/2006 2:59:10 PM PDT by newgeezer (Just my opinion, of course. Your mileage may vary.)
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To: EternalVigilance
So, we'll go on being protectionists in practice

I don't mind giving an advantage to domestic producer. I do not understand chosing one domestic producer over another.

116 posted on 04/27/2006 2:59:52 PM PDT by thackney (life is fragile, handle with prayer)
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To: thackney

My 2006 Silverado gets about 15 city, 20 highway on 87 octane and 14 city 18 highway on e87. I suspect that the EPA figures are the result of a mathmatical construct rather than an actual test.


117 posted on 04/27/2006 3:01:45 PM PDT by Mr. Lucky
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To: Mr. Lucky

So you do get less on ethanol.


118 posted on 04/27/2006 3:02:27 PM PDT by thackney (life is fragile, handle with prayer)
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To: newgeezer

I stand corrected. Wrong terminology, same idea.


119 posted on 04/27/2006 3:06:52 PM PDT by Trust but Verify (( ))
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To: newgeezer

Wow, you are really picking nits. Why not just agree that one does not substanitally differ from the other in this case?


120 posted on 04/27/2006 3:09:46 PM PDT by Trust but Verify (( ))
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