OCRegister, CA
08-24-07
Today's editorial: No car taxes for ethanol
A real alternative fuel wouldn't need subsidies.
An Orange County Register Editorial
The state Legislature is on the verge of passing yet another trendy bill designed
to subsidize alternative fuels (mainly ethanol) at just about the time when sober
reflection is causing many initial enthusiasts, including environmentalists, to
realize that ethanol is not the magic bullet that will cure addiction to foreign oil
and end global warming. The Legislature needs to take a deep breath, put the
corn squeezins aside, and reject Assembly Bill 118.
This bill, sponsored principally by Speaker Fabian Nuñez, would make the
California Air Resources Board responsible for setting standards for the reduction
of greenhouse gases and subsidize the development and marketing of
alternative energy technologies. It would be funded by increasing what is called
the Smog Abatement Fee on vehicles older than six years from $12 to $20 a
year. It also would increase the basic vehicle registration fee $2 a year (from $31
to $33), increase the cost of obtaining or renewing a driver's license by a dollar,
increase the cost of registering a boat by $10 and increase the cost of obtaining
a special license plate for construction equipment, farm trailers, cotton trailers
and logging trailers by $5.
What we have here is a tax on existing vehicles to subsidize technologies that
may or may not become practical in time and may or may not contribute to
ameliorating global warming and reducing pollution. That's a pretty significant bet
that taxpayers would be forced to cover. If it is enacted, the costs we would be
forced to bear as consumers could be significantly higher.
The bill speaks of alternative and renewable fuels, but everybody knows that
means ethanol, so beloved of politicians lately. The fact that corn-producing Iowa
is the first stop in the presidential sweepstakes is no doubt merely coincidental.
Now ethanol will no doubt play a role in the country's energy mix over time. But
the only way to find out whether it is a useful role is to let it compete in the
marketplace on an equal basis with other fuels. It may be too late for that
already. It already receives federal subsidies of 51 cents per gallon in tax credits.
Congress is poised to increase mandates and subsidies for ethanol. Adding more
subsidies would only tilt the playing field more.
In addition, ethanol subsidies and mandates are already skewing agricultural
markets, to the detriment of consumers. Corn prices have almost doubled over
the past year, which mean higher prices for meat, eggs and dairy products, as
well as processed foods made with corn-based sweeteners.
Iowa State University estimated that the per capita cost of higher corn prices to
consumers is $47 more than last year, meaning we're paying about $14 billion for
the politicians' ethanol obsession, in addition to $2.7 billion in tax credits.
Visionaries speak of cellulosic ethanol made from bio-waste and plants like
switch grass, but it's far from commercially feasible yet.
Ethanol should compete with other fuels on an even playing field, without
subsidies and mandates. The state Legislature can't repeal foolish federal
policies (which include a blatantly protectionist tariff on ethanol from Brazil). But it
can reject AB118. If it passes Gov. Schwarzenegger should veto it.