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Political reason among others for Blanco veto of ethanol bill

As Gov. Kathleen Blanco ponders whether to veto HB 685, the bill that would mandate in a short period of time the production of enough ethanol to comprise two percent of all automotive fuel sales in Louisiana she should consider some things.

While part of the reason why ethanol is much more expensive than gasoline is because of government mandates artificially increasing demand faster than supply increases, there’s still the issue that it takes petroleum to make ethanol – a ratio of one unit gasoline to distill two units of ethanol which promises to keep prices higher simply because of the high price of gas as well as that provides even more competition for gas to drive its price higher.

The same logic applies to how the contracting process may exaggerate actual prices for delivery – production costs create a floor on ethanol higher than that of gasoline and send both higher. Proponents may argue that technological breakthroughs may cause this cost to come down, predicting in two years the price will be sufficiently low (and presumably less demanding of gasoline use) to make a unit of ethanol competitive with a unit of gasoline. But it hasn’t happened yet and when it happens is unpredictable.

Which points to the crux of the reason to veto the bill – why force this on Louisiana consumers now? What is the rush to preempt the marketplace on this? Let’s say the lower-production cost prediction comes true; in 2008, producers will go above and beyond the two percent mandate as lower costs entice distributors and consumers Why must a government program be created overseen by Agriculture Secretary Bob Odom as soon as possible start a transfer of wealth from consumers to a handful of sugar farmers by arbitrary triggers in state law rather than by decisions voluntarily made by producers and consumers?

In analyzing this, Blanco needs to clear her head of an earlier notion she floated, that the extra expense to consumers could be offset by state subsidies (in addition to the federal ones – but which are set to expire in 2007). This merely makes the redistribution of wealth by government to a few producers from Louisiana taxpayers instead of consumers.

Blanco must realize no compelling reason exists to pre-empt the market on this issue and to favor special interests – one of whom is Odom, who challenges Blanco for leadership of state Democrats. If not for economic or moral reasons, maybe she’ll veto this bill for a political one.

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