E85, a mixture of 15% gasoline and 85% ethanol, delivers 25% worse fuel economy than gasoline and is not a lot cheaper. Critics wonder why anyone would buy the stuff.

Here is one good reason to fill up with E85 at any price: There is no gasoline.

That’s what drivers faced during the fuel crises of 1973 and 1979, and it is a situation we soon could face again.

Despite soaring prices, the U.S.’ growing population is consuming more gasoline every year and competing with the mushrooming economy of China, the world’s No.2 consumer of oil after the U.S.

At the same time, hurricanes, political and religious fanaticism – even poor pipeline maintenance – are destabilizing oil prices and putting our foreign and domestic supply lines in jeopardy.

In addition to the war in Iraq and general unrest in the Middle East, terrorists are threatening the oil fields of Saudi Arabia, our third-largest supplier of foreign oil behind Canada and Mexico.

Hugo Chavez is the president of our fourth-largest oil supplier, Venezuela. Chavez is developing a strategic alliance with Iran, the world’s fourth-largest oil producer, and is a staunch defender of Iran’s nuclear ambitions.

Chavez’s goal is to keep gas prices high and use the money and power gleaned from oil profits to undermine America’s influence around the globe.

Nigeria, our fifth-largest supplier, frequently has to suspend oil exports due to ethnic violence.

In all, not what you would call a reliable supply base.

Meanwhile, Brazil, which has the largest economy in South America, is weaning itself from imported oil. Ethanol from homegrown sugar cane now accounts for about 40% of Brazil’s automotive fuel.

Thanks to the advent of flexible-fuel vehicles, Brazilian consumers can price-shop ethanol and gasoline according to supply and demand.

Americans deserve that kind of flexibility, too. The world is becoming too dangerous and unpredictable to have all your eggs in one energy basket.

Skeptics say the U.S. is too big to emulate Brazil’s success solely with biofuels. That’s true, but it still can get big results by pursuing not only ethanol but a big menu of alternatives that includes hybrid-electric vehicles; ultra-low-sulfur diesel fuel; E85; biodiesel; natural gas; and hydrogen.

That means beefing up today’s tax incentives for clean diesels and HEVs to fully offset the added cost to consumers. It calls for subsidizing E85 to the point it is competitive with gasoline. And it requires mandating the installation of enough E85 pumps and, later, hydrogen filling stations to make the fuels legitimate alternatives.

The number of alternative fuel vehicles in the U.S. has reached 9 million, according to new figures released by R.L. Polk & Co. Auto makers have set a goal of selling 1 million HEVs, diesel and ethanol vehicles in 2006, and 2 million by 2008. They need more places to fill up.

As an energy policy, it sounds expensive. But if it limits oil-funded terrorism, prevents wars and crippling fuel shortages, it could be the most cost-effective strategic defense initiative ever.

dwinter@wardsauto.com