Expert View: Don't expect America to walk the talk on fuel

'Doing a Brazil' with ethanol is not a realistic option for the US
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The Independent Online

When it comes to market turbulence, there's war, there's revolution... and then there's George Bush. As the President stumbled through his State of the Union address , the oil price staged its biggest one-day rise in a long time. Madness - Mr Bush's "new" energy strategy crumbles under the most basic cross-examination. A non-event - one more in a succession of the US's broken energy promises.

Tuesday's speech was trumpeted as the "greening" of Mr Bush. For the first time ever, the President finally accepted global warming. I guess cycling in his shorts in early January had brought home reality even to him. But he made only two concrete proposals - both of which are dubious.

A plan to double the US petroleum stockpile was what caused the dramatic market move - but don't get excited. The President gave himself until 2027 to accomplish this, and if he had really been in earnest, surely even he would have used recent dips to do some bargain hunting - rather than "go public". Anyway, an effective buffer against spikes in the oil market requires multilateral action among all large global consumers. Not a Bush speciality.

The second proposal was even more esoteric. US cars and trucks currently burn four billion gallons of non-gasoline fuel. Mr Bush announced he wanted this to increase to 35 billion gallons by 2017, with 14 billion coming from a massive increase in the use of ethanol fuel from corn (from where the other 21 billion will magically appear, he did not share with us).

Now, the ethanol option is certainly attractive. A few weeks ago I was in Brazil (where global warming is being blamed for their worst summer on record) and no other country on this planet is a better advertisement for how ethanol can work. Some 80 per cent of cars sold can now run on ethanol, and it is thought to account for nearly 40 per cent of all fuel consumption.

But "doing a Brazil", unfortunately, is not a realistic option for the US. With the current technology, it simply cannot represent more than a tiny percentage of consumption. Barely 0.5 per cent of US gas stations currently sell ethanol fuel, and even at that measly level, ethanol takes up an astonishing 20 per cent of US corn production.

Sadly, I fear, Mr Bush's espousal of this dream has more to do with all those nice subsidies for US farmers/mid-west voters, so typical of America's pork-barrel politics.

If the US really wanted to increase ethanol use, it should dramatically increase imports from Brazil (currently subject to a tariff of 54 cents a gallon). But then again that would not help America's obsession - energy independence. It certainly is a bizarre world where the US is utterly dependent for its core fuel on the likes of Venezuela and the strife-torn Middle East. But what have Americans actually done about this?

Nearly every State of the Union address since the 1973 oil price shock has had some energy waffle, and things have gone from bad to worse. Oil imports then were 35 per cent of consumption. After the ensuing years of crisis, President Carter pledged: "This nation will never use more foreign oil than we did in 1977 - never." Err - wrong! By 1980, imports were up to 40.5 per cent. Subsequent energy policy initiatives have failed, and failed again. When Mr Bush took office in January 2001, the figure stood at 58 per cent. He started talking about cutting this soon after. It is now 66 per cent.

I have little sympathy for US energy-security issues, when they have done nothing to attack wasteful consumption head- on. Contrast this with Europe.

Bold moves are needed, not fudges. European countries have combined serious investment in alternative sources - take Denmark (22 per cent of energy from wind power), or France (with its advanced nuclear programme) - with consumption cuts through tax penalties.

Aha, reduced consumption through higher taxation - unthinkable in contemporary America. How much easier to dream of a "scientific cure".