Adjust Gas Prices to Encourage Alternative Fuels

Here’s a question for the members of Congress and the Obama Administration. How do you encourage the creation of businesses and jobs that produce biofuels as an alternative to gasoline without causing a hardship for drivers who may have to spend more money on filling up the tanks of their cars?
Last summer the price of gasoline was around $4 a gallon. People started to drive less and those in the market for new cars turned more toward smaller, fuel efficient models. Those who advocate fuel conservation point to this as proof that if the price of gasoline was permanently high, then more and more people would be turning to fuel efficient cars and would demand more use of alternative fuels. And this would generate the growth of more and more companies that offer biofuels. Since the fall of gasoline prices, the biofuel industry has been in the tank. Companies are going bankrupt and construction of plants to produce biofuels have been suspended or outright canceled. So how do you encourage the growth of this future vital industry? Many experts say that we should let the free market work its course... with a little bit of help. Some call for a three point plan that would ultimately set up a self-adjusting price floor for gasoline. Here is what they advocate:• Initially, set the price floor of gasoline at $2.50 a gallon. It is said that about 46 percent of fuel sold in the U.S. is a 10 percent blend of ethanol and gasoline and it is said that the cost of this mixture would be a little less than the $2.50 per gallon price floor. • At the end of each day, the average price of pure gasoline should be audited and if it is more than one dollar over the price floor, then the price floor would automatically jump by 25 cents. • Don’t lower the price floor for a period of 10 years. This could provide enough demand for ethanol blended gasoline which will in turn help stimulate the growth of the biofuel industry.