While ethanol is currently one of the "hot" industries as current gas prices remain high, analysts wonder if the nascent industry is being stifled competitively. Currently corn-based ethanol is supported by federal and state tax credits. Sugar-based ethanol, though more energy-effective and cheaper to produce, is primarily manufactured overseas and is heavily taxed. Corn growers argue the tariff is necessary to remain competitive. Analysts point out, though, that both credits and taxes make it impossible for the two fuels to compete in the marketplace while discouraging corn growers from developing their products more efficiently. Finally, relying on one product to produce fuel leaves the consumer more vulnerable to price changes as witnessed by the short supply and high demand for corn.
Many ethanol advocates point to the fuel as a way to break away from oil-producing countries stranglehold on America. Is it possible that fully switching to ethanol be trading one monopoly for another?
[Source: Chicago Tribune]