Monday, May 08, 2006

A Good Gas Idea

With all the economic idiocy going around regarding gas prices, it is nice to see a bit of sanity. From the WSJ editorial page:

The idea here is to offset some of the gas price hikes that Congress has caused via the ethanol mandate it passed last year. That requirement -- that drivers use 7.5 billion gallons of ethanol annually by 2012 -- is currently helping to increase the cost of gas, since ethanol is in short supply. Gas refiners and transporters are struggling to move ethanol from its Midwest production base to places like the East and Gulf Coasts, contributing to the shortages.

One quick solution to this supply crunch would be for coastal states to at least temporarily open their ports to more imported ethanol. The problem is that the U.S. currently levies a tariff of 2.5%, as well as a second duty of 54-cents-a-gallon, on all ethanol. That equals a giant tax that must be factored into already sky-high gas prices, and helps explain why the import market remains tiny.