Today is the 30th birthday of government driven ethanol mandates – so Happy Birthday inefficiency and command-and-control energy policies!

I for one will be celebrating this at a press conference at the National Press Club as part of a Food Before Fuel campaign.

First, let’s a take a moment to examine this situation.

The government wants people to use cleaner fuels – ok, nothing wrong with that. Simply create a market where all types of energy can compete (wind, solar, water, electric, coal, gas, ethanol, etc.) and let the consumers and the free market decide. The most optimal market choice will win out. It’s simple economics, there is no arguing that.

However, the smugness of the government (like those who drive hybrids to tire burning parties), tends to over-shadow the markets because the policies that win out may be not what they want to win.

Currently, the technology simply isn’t there for a lot of these – the answer is to wait! Don’t force it. Forcing policies by using mandates or subsidies is command-and-control market economics that this country simply can’t afford.

Rather than allowing the market to work, this is what happened. The government decided 30 years ago that ethanol should be the “clean” fuel to push. So the mandates began to flow. In doing so, the market was “forced” to try and accept something that wasn’t derived naturally (i.e. there is no real demand) and the market rejected it. The “demand” was artificially stimulated by the forced government mandates.

What happened next?

The government currently subsidies a domestic inefficient producer (i.e. farmer John in the Midwest).

The Congressmen from that district (even the R’s) know it’s bad public policy but do nothing because they are shills to “Big Ethanol.” The government forced market inefficiencies are then promulgated.

Negative externality hits – food, milk, dairy – all things that depend on corn – start to increase in price.

Families start struggling just to buy groceries to feed their children because the government decided 30 years ago it wanted to force ethanol on a market that didn’t want it.

Thanks Uncle Sam.

Was there at least a positive effect on energy/fuel costs?

While we subsidize domestic production of an inefficient product (with negative externalities), we impose tariffs on a more efficient, cheaper, and cleaner burning sugar based Brazilian ethanol.

This is what you call a “loose-loose” situation.

So, we subdize inefficient, expensive ethanol and put tariffs on cheaper, cleaner ethanol (makes your head spin, I know).

This action has done nothing to the cost of energy and actually hurts the environment as domestic corn based ethanol produces more pollutants in the processing than burning regular fossil fuels.

The solution:

Uncle Sam needs to do what all good parents do if their children are still living at home and leeching money from them – kick them out!

30 years later, it is finally time to stand up and end these government driven market mandates once and for all!

Congress should follow fiscally responsible energy legislation. Call your Congressmen and urge them to adopt these policies.