Tuesday, March 13, 2007

Bush Ethanol Plan Makes Sense... for Exxon

President Bush traveled to South America this past week, ostensibly to shore up support for administration policies. By all accounts, the President's visit was a colossal failure except for his mission to Brazil, which, in reality, was the real reason he went south for the week.

While in Brazil, the president negotiated a deal to import more ethanol from Brazil. As it stands, Brazil is the world's largest producer of ethanol; the US is already the largest importer of Brazilian ethanol. Brazil produces 17.5 billion liters of ethanol a year and intends to increase production to 30 billion liters by 2012.

The US will need 132 billion liters a year to attain the lofty goal of 20% reduction in overall gasoline consumption. Currently, 90% of Brazil's ethanol is for domestic use, but the US charges a 54-cents per gallon tariff on every gallon (3.785 liters) of imported Brazilian ethanol.

So, why is the president promoting more imported ethanol from Brazil, replete with a cost-raising tax and instead of dependence on oil from Gulf nations, dependence on Latin American nations?

If the whole affair seems curious, it's because it is bad for Brazil and worse for US consumers. It is, however, a grand idea for agro-globalist companies like Cargill, already invested in Brazil.

For Brazil to increase its ethanol production by almost double would require further destruction of the sensitive rainforest and converting fertile food crop-producing land to monocropping of sugarcane, the primary source for ethanol.

There's also the cheap labor in Brazil to work the fields, keeping the cost of production low. Of course, that's going to be offset by the tariff before the fuel substitute reaches the US. By the time Brazilian ethanol reaches the gas tanks of US drivers, it's nearly as expensive as a gallon of regular gas.

The purpose of Bush's trip was not to curb the use of greenhouse gasses or promote the use of ethanol, but to keep the price of oil (and gas) at high profit levels for his corporate buddies at Exxon/Mobil, Chevron, et. al.

Bush could care less about reducing our dependence on foreign fuels. He actually is working to increase that dependence rather than promoting domestic ethanol production. Naturally, Republican senator Richard Lugar thinks importing ethanol from Brazil is a great idea.

For more background on the issue, see this article at CounterPunch.

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