Monday, May 19, 2008

Knowing when Ethanol is in the Gas you buy

Does it seem like you are getting less miles per gallon than you used to? You may have seen recent media reports concerning fuel efficiency. Car owners who had been tracking their vehicles' fuel economy raised questions when they noticed a significant drop in their gas mileage. The cause of this drop was tracked back to the number of gas stations that are blending ethanol with traditional gasoline products. One media outlet reported that as many as 75% of gas stations were using ethanol blended gas. Research has shown that ethanol does not burn as efficiently as gasoline and can actually damage older model cars.

I have been contacted on this issue by local constituents. People feel that it is unfair to have to guess at which gas stations are using these products. Even though this year's legislative session had already started and no new legislation could be introduced to solve the problem, Representative Phil Richardson authored and modified a bill that required fuel retailers to clearly label any fuel blend containing 1 to 10 percent ethanol. Senate Bill 1451 passed the Oklahoma House of Representatives with a 99-2 vote and received final approval in the state Senate with a 44-2 vote, after which Governor Brad Henry signed it into law.

Recently there have been a number of news reports regarding concerns with the federal government's policies of subsidizing the production of corn to be used for ethanol. Attention has been given to the federal government's role in ethanol production due to rising food costs and possible shortages. A recent report from the World Bank states that almost all of the increase in global maize production from 2004 to 2007 (the period when grain prices rose sharply) went for bio fuels production in the United States.

You might also be surprised to know that as an Oklahoma taxpayer, your state tax dollars are being used to fund the ethanol industry.

One reason that retailers may want to sell ethanol blended products is due to the fact that state government incentivizes the distribution of the fuel by allowing a 1.6¢ tax credit for each gallon of ethyl alcohol which is contained in ethanol sold by retail dealers. In other words, the taxpayers are put at risk of paying for this product to be distributed.

Not only do Oklahoma taxpayers foot the bill when ethanol blend gas is sold at the pump; they also pay tax credits to the producers of ethanol.

I feel that when government gets involved in trying to sway the market, too often there are unintended consequences. In this case, government involvement has resulted in increasing food costs and decreasing fuel efficiency. I think state and federal governments have made a mistake in using our tax dollars to tinker with the free market and I believe that eventually the free market will provide true solutions to our energy crises if the government would step back and allow the market to work unhindered.

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