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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: 2MAR$ who wrote (181234)	2/6/2006 9:11:27 AM
From: Hawkmoon	Respond to of 281500

I'm not sure if the situation in the US would resemble Brazil's problems. For one thing, they subsidized the production of alcohol, only to later slash those subsidies in order to motivate farmers to be more productive. The government helped make ethanol affordable through free-market policies, too. Brazil's ethanol is made from sugar, which had been coddled with subsidies for decades. When the cost of the ethanol program became prohibitive in the early 1990s, Brazil slashed its subsidies and forced its farmers to become more productive to survive and thrive in a global market. Since growing the sugar represents by far the biggest cost in making Brazilian ethanol, trimming sugar prices was the key to making more affordable fuel. The reason the subsidies existed in the first place was due to Brazil's desire to keep alcohol prices low so it would compete with fossil fuels. The question really is.. Are oil prices now at such a point where alcohol production no longer needs to be subsidized? And why would farmers need to have their corn and sugar farmers subsidized if they have far more valuable market that they can no sell to? But no doubt there will be distortions in the economy. Turn sugar into the nation's primary fuel source and that will impact food prices. But the one encouraging trait of alcohol production is that it is a stepping stone to a hydrogen economy, since alcohol can be used in fuel cells. Btw, the US has experience with mandating alcohol use. I remember the years of Gasohol and oxygenated fuels. So mandating increasing usage of alcohol blended fuels is very viable. Hawk