Ethanol Efficiency?

Many have pointed to ethanol as an alternative to "our dependence on foreign oil." The interest in ethanol as an alternative energy source has led to many studies, and apparently a significant dispute over whether ethanol requires far more energy in production than is returned for use as a fuel. The Wall Street Journal ($$$) has an interesting discussion of this issue written by Carl Bialik, "The Numbers Guy". He makes the following observation:

"It can be disorienting to discover that reputable researchers can so seriously disagree on a single number. In an article last month, the Toledo Blade counted studies, as if that might help settle things. The newspaper noted Prof. Pimentel's work, and added, 'Five other researchers have done studies and agree. Thirteen other studies, including one paid for by the Department of Energy, show the opposite.'"

I guess I don't find this disagreement surprising. After all, I've written here on numerous occasions that when science and politics meet, politics wins.

Perhaps in this issue we can once again see the beauty in the economic analysis of public policy. A sure way of discovering if ethanol is "efficient" is to let the market test the hypothesis.