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Finance For Dummies

Finance For Dummies offers personal finance information on investing, retirement investing, finance, insurance, credit cards, loans and more. Personal finance education is our goal.

Tuesday, June 20, 2006

Can Ethanol Lower Energy Prices?

Ethanol has been seen as a possible answer to oil prices and global warming. Recent demand
has made its price skyrocket. Is it the answer for Americans looking for lower energy prices?

Maybe or maybe not. There are strong arguments that state currently ethanol makes gasoline more expensive. Other arguments say it a great answer to our farm over-production. Instead of the subsidies that would go to farmers, the farmers could make ethanol so the U.S.A. is energy self-sufficient (and we could take oil off our national interest policy list). Many think it is good for the U.S.A. in so many ways. But global warming certainly is not slowed by the use of ethanol because the production of it uses more energy than it saves.

The important part of this argument is that the more that people discuss and argue about alternatives to fossil fuels the more scientists, inventors and entrepreneurs will create ways thatalternative energy sources that will lower energy prices, and for everyone's sake lessens humans' impact on global warming.

In the short term we should all be ready for more of a rise in energy prices because no matter what we use there will be a transition cost to get away from oil. We will have to see if the market and science bears that out or not.

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