Energy Economics: Cliff May Must Be Running for Stupidest Man Alive
Cliff May really does try too hard. First of all, he makes this statement:
The economy grows sluggish and politicians rush to “do something” about it. What they do almost never has a beneficial economic impact, as any reputable economist will tell you
And then links to this hack (I’ll comment on the hack’s latest in a separate post). But I guess if one asked Mr. May about the General Theory by Lord Keynes – he’d have no clue who Keynes was.
But the point of the latest in sheer stupidity on economics from the National Review had to do with competition in the gasoline market:
Everyone who is not an economic illiterate knows that competition leads to lower prices. But there is no competitive market in transportation fuels. In most parts of the country, you can buy gasoline or you can buy gasoline. And most cars can run on gasoline or gasoline.
My God! Did Exxon monopolize the gasoline market? Is that why they are earning record profits? No – there is indeed competition in the gasoline market but May laments that we don’t have more competition from alternative fuels:
Right now, most American ethanol is made from corn but it can be made from just about any starchy crop: sugar cane (already widely used in Brazil), yams, and sweet potatoes, to name a few. And any kind of biomass, including wild grasses, crop residues, fallen leaves and weeds that clog rivers can be used to make methanol, as can urban trash and coal – two commodities the U.S. possesses in abundance.
Now if Chevron wants to make fuel from wild grasses and if BP wants to make fuel from yams, they are free to do so. They don’t likely because the cost of making a gallon of yam gasoline or grass gasoline is higher than the cost of making gasoline out of petroleum. Now if the government wanted to subsidize alternative fuels, maybe BP, Chevron, and Exxon could make money off of this as they lower the price of fuels to motorists. But wouldn’t we taxpayers have to somehow pay for this subsidy?
Update: AB reader Mcwop reminds us of The Great Corn Con by Robert Bryce, which is definitely worth the read while we are on this topic.