QotD: The economics of bioethanol

Promoters of the ethanol mandate assert that it would help the United States achieve energy independence and slow the accumulation of greenhouse gases that are driving climate change. Evaluating the scientific and economic claims being made for bioethanol can be vexing, but a few urgent questions come to mind: if bioethanol is such a good energy deal, why must refiners and consumers be forced to use it? Again, if it's such a great idea economically, why does the federal government offer a tax credit of 51 cents per gallon for blending ethanol into gasoline?

In fact, the subsidies are probably higher than that. For example, a 2006 report by the International Institute for Sustainable Development estimated that if one took into account state renewable fuel tax breaks and direct agricultural subsidies that reduce other costs, the total amount of the ethanol subsidy rises from $1.05 to $1.38 per gallon of ethanol

Ronald Bailey, "Bioethanol Boondoggle: Political viability is more important than commercial viability", Reason Online, 2007-12-04