The Economics of Biofuels

By | August 27, 2014

 

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Aside from rejecting biofuel expansion and use for environmental reasons (see Biofuels (Land and Water Concerns)[1] and Biofuels (Miscellaneous)[2] in our Subject Index), the production and use of biofuels from an economic perspective does not make much sense either. Proponents of biofuels say their increased production will increase the supply of transportation fuels and therefore lead to lower prices. Critics of biofuels point out ethanol often costs more, not less, than gasoline, either because of production costs or supplies that can’t keep pace with government mandates, and therefore leads to higher prices at least in the short run.