November, 2017
Some will say that I might be just a little prejudiced on this issue, but I think the government is a little on the wrong side here. I’m not saying that I’m an anti-oil company, big government liberal or anything. You be the judge.
I noticed a sign at a gas station on the way to work tonight. Unleaded gasoline was $2.29 per gallon and E-85 was $1.99 per gallon. Of course, we’ve all been through the analysis that the only reason for ethanol to be cheaper than gasoline is government subsidies.
But that’s not the issue.
The quantitative analysis.
E-85 is 85% ethanol and 15% gasoline. The ethanol is distilled from grain products grown right here in the good ‘ol US of A. So, people who purchase the ethanol pay 30 cents for the gasoline in the mixture and $1.69 for the ethanol. So, if the gallon was pure ethanol, they would be paying $2.34 for a gallon.
Do you see where I’m going with this, yet? No?
Well, let’s look at the cheapest liquor in the US. For Example, McCormick Vodka. At about $36 per gallon, it is 80 proof, or 40% ethanol. It is made from distilled grains grown right here in the good ‘ol US of A, mind you. So, still speaking of the cheap stuff, one pays $90 for one gallon of pure ethanol. I’ll leave it up to the reader to work out the price of higher quality Oban scotch, for instance.
The qualitative analysis.
Our government is subsidizing an industry that takes domestically produced grain and makes fuel so that a small minority of consumers can feel good while a sister industry uses the same grains in the same process to make the same product that a majority of consumers use to feel good.
But for a hugely different price.
This, in my humble opinion, deserves the same actions as the Boston Tea Party.
From your grumpy Uncle/Brother Dave. For those interested, it’s all algebra.