December 28, 2010

The Latest Mixed-Economy Mix

Mix special interests, politicians-on-the-make, and expanding bureaucracies and what do you get? E15 gasohol.

Matthew Wald of the New York Times's "green" blog reports that government ethanol mandates and subsidies make it harder to sell gas efficiently. Converting gas tanks to accommodate the new 15 percent ethyl alcohol/gas blend, E15, could mean shortages of gas for customers with cars that can't use it. Moreover, ethanol can damage some engines and gas pumps.

A slew of engine manufacturer associations have sued the EPA to block approval of E15. On the other side of the special-interest coin, it's worth noting that it was the ethanol industry that pushed for E15 approval in the first place.

The approval by itself wouldn't mean much if buyers and sellers weren't being forced to use ethanol. New fuel products have been introduced by market participants in the past; with E15, producers and resellers could offer -- and consumers buy -- the fuel that makes the most economic and technological sense. Instead, the current innovation is an artifact of government policy. You can be sure that the problems caused by imposing ethanol will trigger other political "solutions" that worsen market disruptions, triggering even worse "solutions," and so forth.

Our "mixed economy" isn't generally efficient, like free markets tend to be. In a mixed economy, the political winners win big; the rest of us lose.

It's a mixed bag. The headier mix resulting from freedom? Far better.

This is Common Sense. I'm Paul Jacob.


December 28, 2010 The Latest Mixed-Economy Mix Mix special interests, politicians-on-the-make, and expanding bureaucracies and what do you get? E15 gasohol. Matthew Wald of the New York Times's "green" blog reports that government ethanol mandates and subsidies make it harder to sell gas efficiently. Converting gas tanks to accommodate the new 15 percent ethyl alcohol/gas blend, E15, could mean shortages of gas for customers with cars that can't use it. Moreover, ethanol can damage some engines and gas pumps. A slew of engine manufacturer associations have sued the EPA to block approval of E15. On the other side of the special-interest coin, it's worth noting that it was the ethanol industry that pushed for E15 approval in the first place. The approval by itself wouldn't mean much if buyers and sellers weren't being forced to use ethanol. New fuel products have been introduced by market participants in the past; with E15, producers and resellers could offer -- and consumers buy -- the fuel that makes the most economic and technological sense. Instead, the current innovation is an artifact of government policy. You can be sure that the problems caused by imposing ethanol will trigger other political "solutions" that worsen market disruptions, triggering even worse "solutions," and so forth. Our "mixed economy" isn't generally efficient, like free markets tend to be. In a mixed economy, the political winners win big; the rest of us lose. It's a mixed bag. The headier mix resulting from freedom? Far better. This is Common Sense. I'm Paul Jacob. Comment on this episode \| View/download the PDF	Paul Jacob is President of Citizens in Charge and Citizens in Charge Foundation, which sponsors both Common Sense and Paul's weekly Townhall Column. The opinions expressed in Common Sense are Paul Jacob's and do not necessarily reflect the opinions of Citizens in Charge or Citizens in Charge Foundation.