ETHANOL: THE CASE FOR CENTRAL PLANNING

Ethanol is far and away the most ideal gasoline substitute; not for drivers, cars, clean air or low cost, but for Democratic Con-gessman Richard Durbin of Illinois and the corn belt farming interests he represents. Its economy, either as a gasoline additive or as a neat automobile fuel, is poor in the general sense; but it is superb in providing Durbin's constituency with a triple subsidy.

Ethanol (ethyl alcohol) is made from corn by fermentation and distillation. Its advantage compared with methanol is its high volatility, better than that of gasoline, so that there are no problems with cold starts. Indeed, its volatility is such that accord-ing to a magazine report from Brazil (where it is manufactured from sugar cane and widely used) its fumes in parking lots and garages make people feel drunk. Its impact on air quality is probably not too different from that of gasoline: its seems to produce more ozone, but this may be offset by its cleaner burn due to the oxygen contained in the fuel.

Engines would have to be redesigned to make them run effi-ciently. The air/fuel ratio for ethanol is 6.4:1, compared with gasoline's 14.5:1. This can be taken care of by a different (or even a double) carburetor, but the optimum compression ratio is at least 13:1, which is way too large for even high-octane gasoline.

But ethanol's most severe disadvantage is its poor economy. This is not easy to ascertain with subsidy-distorted prices, but the case of Brazil, also imprinted by the heavy hand of government, is instructive. There the government hoped to reduce oil imports by switching cars to methanol and ethanol made from sugar cane. But as of last year (reported the Financial Times) sugar prices were up, crude prices down, a painful shortage of alcohol fuel developed, and the government now pressed manufacturers to produce more gasoline burning models. Experts estimate that when the subsidies and other costs are counted in, Brazil is paying three times the cost of crude oil for its sugar-based alcohol, while losing the sugar cane and still importing 45% of its oil.

At that level, however, it might be more efficient to burn the corn in steam driven automobiles, for according to the OTA's report, a negative energy balance may set in: more oil and gas would be used to produce the ethanol than would be saved by the replaced gasoline.

Then there is the question of byproducts, such as the corn stil-lage, which can be sold as a high-protein substitute for soybean meal as a livestock feed. This now optimistically figures in the predictions of ethanol costs, but if that market is saturated, the net production costs would increase drastically.

Fortunately a "window of opportunity" is now opening to take care of such frivolities in the market. Tens of thousands of experts in government-run economies will soon be looking for jobs in Central and Eastern Europe, and probably in the USSR as well. This is a splendid opportunity to exploit their considerable diligence and decades of experience in fine-tuning a centrally planned economy for decreeing automobile fuels by subsidy and legislation as proposed by the Hon. Durbin.

How could they possibly fail?