The new energy bill may not actually reduce our dependence on foreign oil but it does create clear mandates for renewable fuels to 36 billion gallons by 2022, 16 billion of which would come from cellulosic ethanol.

The law also requires that automakers achieve an industry average fuel efficiency for cars, SUVs and small trucks of 35 miles per gallon by 2020. This represents the first increase in the federal requirement in 32 years.

Opponents of the energy bill have said that China has more stringent automobile efficient standards.

My problem with the bill is that the bill preaches energy conservation which is nice but does little to suggest how we increase production. In fact, by increasing the ethanol standards which is a home run for companies such as ADM, we are shifting the burden from the oil tank to the farm lands. Ultimately, the burden may move to the consumer due to increased costs for food, energy efficient light bulbs, etc. In the end, we must ask what does the bill actually do and who does it help?

Any answers?

I was discussing with one of my associates the other day that federal mandates for ethanol usage don’t come anywhere close to capacity and my friend quipped, “Now you can run for congress.”

When reviewing the numbers, I think he’s right. One has to really question what congress is doing when our federal mandates are more than 2 billion gallons below capacity. Is Congress really trying to reduce our dependence on foreign oil? Can’t Congress put some pressure on the EPA to accelerate the mandates for ethanol or are we being careful not to upset the OPEC cart?

Todd Sullivan had this to say at Seeking Alpha:

That means the “mandate” could have been raised another 20% to 30% and current capacity could have easily handled it.”