The title is a poor attempt to combine the term “snake oil” with the substance I’m discussing here: ethanol.
Ethanol has been perpetually trumpeted as a fuel source that we could produce domestically to lower our foreign oil dependency. This has always been a pipe dream. From day one, the ethanol industry needed government subsidies to even get it off the ground. Guess what? It’s still failing. As Ed Wallace describes in this Business Week article, this is a scam that is costing the average American in three ways:
First, the taxpayers are paying to subsidize the farmers to grow the corn and other crops sold to create ethanol.
Second, the average American is paying more for food costs because the use of these crops as fuel has driven up prices of the foods that used to be grown in the same place.
Finally, and most subtly, car-owners are paying for repairs because ethanol damages engines of all kinds. As Wallace describes, high ethanol content (in the 10-15% range) will damage or destroy fuel filters, fuel lines, and fuel pumps in a variety of cars. It is damaging to small engines (such as those used in lawnmowers, blowers, edgers, etc.), and will break down the resins used in marine engines. For many cars, simply using fuel with more than 10% ethanol immediately voids the warranty.
So, you have a product that has no sustainable business model, causes price inflation in other, more important, markets, and actually damages the property of those who use the product. Oh, and the government pays to have it created and sold. When this industry tanks anyway, isn’t just time to let it die a natural death?
Apparently not. Ethanol producers are lobbying for the government to mandate 15% ethanol fuel to increase demand in an attempt to revive the industry. And, of course, the EPA is considering it. I have to agree with Wallace’s conclusion about this madness:
Sadly, when a truly bad idea is exposed today, Washington’s answer is to double-down on the bet, mandate more of the same, and make the problem worse. Only this time around motorists will be able to gauge the real cost of ethanol when it comes time to fix their personal cars.