Frank J. Gaffney, Jr. makes the case for Flex Fuel mandates that I completely support. He likens the high price of gas (which isn’t high enough yet) to a tax on the American peeps without representation. While that’s an interesting way to see it, I tend to disagree. A “tax”, at least in modern day America, implies that the money would be put to use for “the public good” (depends on how you define it), while the profits on oil go to fund terrorists and their brand of radical Islam.

In any case, the point is that we need to be independent of oil for National Security. By that I mean that the threat of no more oil (or at least severely decreased amounts) is a real stick to keep the Saudis in line. It also would tend to dampen the speculation of the oil market that OPEC engages in. WTF am I talkin’ bout?

Unlike perishable agricultural products, oil can be stored in the ground. So when will an owner of oil reduce production or increase inventories instead of selling his oil and converting the proceeds into investible cash? A simplified answer is that he will keep the oil in the ground if its price is expected to rise faster than the interest rate that could be earned on the money obtained from selling the oil. The actual price of oil may rise faster or slower than is expected, but the decision to sell (or hold) the oil depends on the expected price rise.

That’s from the interesting piece in the WSJ by Martin Feldstein. Of course like Ed Morrissey of Hot Air, Mr. Feldstein can’t resist taking an uninformed (IMHO) potshot at ethanol and the price of corn.

Two words: distiller’s grains

The corn that goes into ethanol production comes out as distiller’s grains which can be fed to livestock in place of, get this, the CORN that goes into the ethanol plant.

As I have written many times before, I am no fan of corn as a feedstock for ethanol based on efficiency, but there is no reason to demonize ethanol because it is currently made from an inefficient feedstock. With new technologies (i.e. algae, coal gasification) in development, it seems like a smart move to be prepared for ethanol and biodiesel in the entire transportation sector.