We Have Got To Stop BioFuel Subsidies Right Now
I have no problem if someone wants to compete out there in the free market producing fuel from corn or switchgrass or whatever. But we have got to stop the subsidies right now, before it is too late. Biofuels do absolutely nothing, zero, zippo to change CO2 production, and some studies show they make CO2 output worse when you consider the whole production cycle. This is not to mention the effect biofuels will have in putting more wild and forest land under the till.
I can't see any conceivable benefit to the economy from subsidizing biofuels, except some hazy notion of energy independence which has limited economic value and which will never be achieved with biofuels (we will have jacked up the price of corn so high we can't feed cattle long before biofuels make even a minor dent in oil imports). My only guess as to true motivation is that people want to spite Exxon and Shell, but if you don't like those companies, you really aren't going to like Archer Daniels Midland.
Biofuels, given current technology, are a pure product of politics. They are a massive subsidy of Midwestern farmers that the recipients can claim is not really a subsidy. If the first presidential primary were in Nevada rather than Iowa, you would never hear a word from politicians about ethanol.
But here is the reason we need to end the subsidies right now. [emphasis added]
A $400-million integrated biodiesel and ethanol refinery the first
complex of its kind in North America will be built in central Alberta.Led
by Dominion Energy Services, LLC a Florida-based group with pioneering
ties to Calgary's natural gas marketing sector investors that include
$45-billion US private equity fund The Carlyle Group LLC and affiliate
Riverstone Renewable Energy Infrastructure Fund I, LP said Monday they
have finalized plans for the facility....Alberta Agriculture Minister Doug Horner noted the "world-class"
Dominion plant follows the provincial government's recent, $239-million
over five years initiative to boost biofuels production. The province
will provide a 14-cent per litre production credit to the facility. [for those rusty on the metric system, that is 56-cents per gallon or $23.53 per barrel]
Companies are currently building massive subsidy-magnets biofuel plants. Once these investments are in place, there is going to be a huge entrenched base of investors and workers who are going to wield every bit of political power they can to retain subsidies forever to protect their jobs and their investment. Biofuel subsidies will be as intractable as peanut and sugar subsidies and protections.
Update: Radley Balko mentions another great example. For various post-prohibition reasons that may or may not have made sense at the time, state laws prohibit retailers from buying alcoholic beverages straight from the manufacturer - e.g. Costco cannot buy direct from Anheiser-Busch. Wholesalers who emerged to fill the legally required middleman role became rich. Since then, even thought this 3-layered distribution requirement makes zero sense, it has become impossible to change it because the wealthy distributors who owe their fortunes to the requirement block every move to deregulate.
Jon Nichols:
These subsidies are going to hurt the poorest people, by dramatically increasing the price of food. The silence on this issue is deafening from the left - I suppose they can't figure out how to reconcile their environmentalism with helping the poor. The corn prices are already causing problems in Mexico, which certainly won't help the immigration issue.
I do have hope, because I suspect that things will get so bad so quickly that the system won't be able to sustain itself. When corn prices rise 10x more, someone will have to face the reality. Let's hope...
April 19, 2007, 10:36 pmTim:
It doesn't take a rocket scientist to see that they are going to pull the rug out from under the farmers at some point. Just when they have geared up with new equipment, more loans, and more direct investments in ethanol plants (the plants in Illinois are largely farmer-cooperatives)some bureaucrat is going to shut the whole thing down and leave the farmers holding the bag. It happened that way in the 80's. For what it is worth, it is the reason that Cargil said that they will own no ethanol plants, they will just market and ship ethanol. Pretty smart move if you think that this thing won't last long enough to give a ROI.
April 20, 2007, 9:19 ammarkm:
There's more to biofuels than ethanol from grain. Ethanol from sugar cane might be economically competitive - in Brazil. Biodiesel from used deep fry oil is obviously not going to replace even 1% of our total petroleum consumption, but as a 5 or 10% blend with petroleum-based diesel oil it seems to be economically viable and every little bit helps. Biodiesel from virgin oil is much iffier; for instance, oil palms supposedly have an amazingly high productivity (in BTU/acre terms), but I haven't looked into where they'll grow, what the environmental impacts are, etc.
That leaves two groups of "blue sky" projects that might pay off in the future. One type is various digesters that supposedly render diesel fuel out of garbage and most anything else organic. The other is multistep fermentation of cellulose to alcohol, which in theory could produce ethanol from waste paper, straw, wood, yard clippings, ... Neither one of these is anywhere near commercial success, and although there have been demonstrations there might well be unsolvable problems in scaling them up and making them reliable enough for everyday use. Good chemists know of lots of processes they can make work in the lab sometimes, but will never be able to scale up to massive quantities and turn over to a production crew.
April 20, 2007, 10:04 amrufus:
You guys are way, way off the mark as regards ethanol. It has a very positive energy balance, and can be produced, w/o subsidies, for about $1.10 - $1.25/gal.
The price of corn is falling, and the price of tortillas in Mexico had absolutely "Zip" to do with the production of ethanol in the U.S.
Cargill owns two Ethanol Refineries in the U.S. (scroll down.)
April 20, 2007, 10:46 amRon Steenblik (Global Subsidies Initiative):
Rufus, I find it curious how defenders of the industry keep saying that ethanol in the USA can be produced "without a subsidy", and then fight tooth and nail to defend maintaining the subsidies -- along with the $0.54/gallon tariff on ethanol imported from Brazil. If the industry is really serious in this conviction, then why aren't we seeing the Renewable Fuels Association lobbying Congress to end the $0.51/gallon volumetric ethanol excise tax credit (VEETC) right now, or at least announcing that they agree that it should expire at the end of 2010?
And it is not true that the price of tortillas in Mexico had absolutely "zip" to do with the production of ethanol in the U.S. Demand for yellow corn from ethanol plants certainly drove up the price of corn (which has fallen slightly recently, following the USDA announcement of plantings; whether the weather will favor a good harvest this year remains to be seen). That lead some buyers of yellow corn to turn to white corn (i.e., the kind used to make tortillas), which drove up its price. We should not be surprised that there is strong arbitrage between the prices of white corn and yellow corn.
Finally, yes it is true that Cargill owns only two refineries in the USA. But Coyote was referring to ADM, which owns a lot more than two refineries.
April 20, 2007, 8:55 pmrufus:
Ron, one of the commenters stated that Cargill owned NO refineries. I was just setting the record straight.
You may have noticed that the oil and gas industry (which made tens of billions) received more subsidies in the 2005 energy bill than ethanol did. Did they rush to "Give them back?"
Ron, our transportation Energy Business is in the hands of an oligopoly. Big oil completely owns the distribution system. Let's give biofuels a little leg up to break through this unholy alliance of the opec cartel, and the seven sisters, eh? BTW, the ethanol subsidy last year was about $2 Billion and change. That's just about what we got back in increased taxes of one sort or another. Oh yeah, they figure the ethanol industry is now supporting 160,000 U.S. Jobs, with more on the way.
The cost of the White Mexican Corn in a Tortilla went from 1/4 of a penny to 1/2 of a penny. Like I said "Zip."
Look, Ron, if we're not at "Peak Oil," we're getting close to it. China, and India's appetites for oil are going to be voracious in the coming years. Ethanol is a good solid move to help mitigate the transition away from a diminishing resource.
Also, the million, or so, barrels of oil a day that we are replacing with ethanol has to be cutting into the price of gasoline, somewhat. We're getting some of our subsidy money back, right there. I'm going to stop here, and see if I can get this posted before my wireless connection goes out. Keep the Faith.
April 21, 2007, 9:32 amRon Steenblik (Global Subsidies Initiative):
Rufus, sorry for misunderstanding your point about Cargill.
Nope, the oil industry did not rush to give back their subsidies either. But neither are they going around boasting that they can live without them. And, in any case, Congress is at least (and at last) trying to reign in those subsidies.
You say that the transportation energy business is in the hands of an oligopoly. "Big oil completely owns the distribution system." Then why promote something like ethanol and biodiesel that relies on -- indeed, perpetuates -- the existing petroleum distribution system? The only part of that system the ethanol industry does not use is the pipelines. Otherwise, all the ethanol and biodiesel used in the USA (and elsewhere in the world, except for a small amount of hydrous ethanol consumed in Brazil) is mixed with petroleum products.
The subsidy value of the volumetric ethanol excise tax credit (VEETC) last year was actually closer to $2.5 billion ($0.51/gallon x 4.86 billion gallons), but that is only part of the story. There is also the Small Ethanol Producer's Tax Credit, plus various state-level subsidies and fuel-tax exemptions, plus the subsidies that go to producing the corn used as a feedstock. Our estimate is that total support to ethanol -- including state-level subsidies -- was more like $6 billion.
Six billion dollars for around 3.5% of gasoline consumption (2.2% on an energy-equivalent basis). Moreover, to produce the corn and the ethanol required significant hydrocarbon inputs to plant, fertilize, till, harvest and process the corn, and to distribute (by truck or rail) the ethanol to gas stations. The net petroleum displacement will have therefore been significantly less than 3.5%.
The U.S. ethanol industry has been subsidized since the late 1970s -- almost 30 years. Moreover, the value of the subsidies, because the bulk of them are tied to production, are set to grow to double-digit billion levels within a few years. The cumulative cost over the next 11 years of meeting President Bush's 35 billion gallons per year target for 2017 would be $118 billion just from the VEETC alone. Meeting John Edwards' target of 65 billion gallons per year target by 2025 would cost $350 billion over the next 19 years.
That is more than giving biofuels "a little leg up".
April 21, 2007, 2:49 pmrufus:
Ron, the thing is; I'm with you, here, in spirit, if not in fact. I'm very much an "Austrian" at heart, but, sometimes the real world intrudes into my ideology. :-) That said:
Keep in mind, however, that these "subsidies" are, in fact, "Credits" against an excise tax. We're all in favor of "cutting taxes," Right?
Now, I'm afraid you've stepped into my trap when you brought up "Corn" Subsidies. The Ag Dept. figures the higher cost of corn (you know, that extra $0.03 that you spend for your box of corn flakes) has Saved the Government (taxpayers) $6 Billion in Unpaid farm subsidies this year.
I think we need to, also, keep in mind the $140 Billion, or so, that we will spend in the ME this year keeping the oil flowing.
Ron, keep in mind that this whole process is getting much more efficient than it was just a few years, ago. Broin (now called, "Poet") is putting up a hundred million or so of his company's money to expand the Emmetsburg, Iowa plant to process the corn stalks (stover) and other residue. Many of the Newer refineries are following the lead of Corn Plus in Winnebago Mn in the use of "fluidized bed gassified reactors" to burn their own syrup, and unhook from the NG pipeline. Many of the new ones will, also, produce high quality Nitrogen fertilizer.
April 21, 2007, 4:11 pmrufus:
I'm back. I have an extremely spotty connection, and I hate to write big long posts only to have my computer eat them.
I think it escapes many of ethanol's critics that Corn is an incredibly Cheap commodity (about $0.05/lb) and is primarily used for cattle feed. When a bushel of corn is converted into approx. 3 gallons of ethanol (depends, of course, on the individual refinery the exact amount) you still walk away from the process with 1/3 bushel of comparable quality cattle feed, and about 18 lbs. of CO2 which can be used for oil extraction, etc. The point is the very worst I'm getting is 4.5 gal/bu, and I could make a pretty strong argument for 9 gal/bu.
And, that's without using the stover which will kick it up another 25%, or so, and provide feedstock for the heat process.
Look, these are pretty small incentives we're putting up for a down payment on a process that could be of great value to our country in the not too far future.
April 21, 2007, 4:27 pmTJIT:
Rufus,
Ethanol is nothing but an expensive way of taking money from the taxpayers and giving it to ADM and corn growers. This is great for the people who make a living from ethanol production it is bad for everyone else.
If it were not for the subsidies and mandates not a quart of ethanol based automotive fuel would be produced in the US. If ethanol made any kind of economic sense the oil companies would be making it. The fact that oil companies are not making ethanol should make it abundantly clear that ethanol is not a realistic source of fuel for transportation.
You talk about subsidies and completely ignore ethanol blending mandates. The mandates are the real driver of the ethanol markets.
With respect to the feed issue you are ignorant of the fact that pigs and chickens can't be fed distillers grains and higher portions of distillers grains in cattle feeding ration causes a reduction in beef quality.
Furthermore ethanol distillers are working on combustion processes that will allow them to burn the distillers grains as a fuel source for the ethanol plants. When that happens no more distillers grains for other uses.
April 21, 2007, 8:20 pmTJIT:
Rufus,
The fix for an uneven subsidy landscape is to end the subsidies, not create new ones.
Here is an illustration of some of the bad influences the ignorant, stupid, short sighted, rent seeking ethanol subsidy and mandate program are already starting to create.
For years the US has paid farmers not to farm highly erodable farmground. Now there is a push on to put this highly erodable back into production to meet the corn demand created by the subsidies and mandates for ethanol production.
I think the not farming subsidy and the ethanol subsidy are both stupid and destructive. But it is entertaining to note that the government has created two subsidy programs that require each program to do the exact opposite of what the other program is paying to try and accomplish.
April 21, 2007, 8:34 pmmarkm:
"Big oil completely owns the distribution system." IIRC, it was on this very blog that I found out that the nine biggest oil companies in the world are government owned. American-style corporations start at #10. So if you've got a problem with "big oil", you'd better not be suggesting more government as a cure...
April 22, 2007, 4:44 amrufus:
If ethanol made any kind of economic sense the oil companies would be making it.
Really? Would you like just a few more minutes to think about that one?
With the "Global Use" of Biofuels reaching a Million Gallons/Day I would say that we're all benefitting from lower gasoline prices.
We currently have 1,190 gasoline stations selling E-85 (85% ethanol.) There are no mandates for that.
I am, also, hip to the fact that some refiners are taking the oil out of the distillers grains, leaving a much better feed for poultry and swine, and producing some extra biodiesel at the same time.
That fallow pastureland is more "marginal" than it is "erodable." What they're doing is telling the farmers that they can continue to receive their "conservancy" money if they plant the land in grasses for "cellulosic" ethanol productiion. The "birds' nests, and such, have to be maintained.
Mark, I think it's the top 3 or 4 oil companies that own something like 90% of the gasoline retail outlets in the U.S, and, yes, they're as afraid of ethanol (especially E-85) as a goat is a butcher knife.
April 22, 2007, 8:42 amrufus:
That should have been One Million Barrels/Day.
This is just one small example of what's happening Around the World.
Something similar to this is happening in probably one hundred countries. The only people who Should be Unhappy with this are those people who thought they were going to be selling us $500.00/Barrel Oil next in the coming years. It ain't gonna happen.
April 22, 2007, 8:49 amrufus:
Gents, what we got happening, here, is a "World-Wide Phenomenom." Chinese Cars.
April 22, 2007, 12:16 pmRon Steenblik (Global Subsidies Initiative):
Rufus,
Currently, biofuels are contributing less than 2% of total global demand for liquid road-transport fuels. And that is on a gross, not a net basis. The International Energy Agency sees that share rising to at most 7% by 2030, and then only under some optimistic assumptions (like aggressive improvements in the efficiency of vehicles).
You say that there are no mandates for E85 pumps. No, not yet (though there are plenty of bills before Congress proposing exactly that). Meanwhile, there are hefty federal and state subsidies for any gas station owner that wants to install an E85 pump. And government policy is pushing consumption of ethanol in the form of E85 through both government procurement preferences and the "dual-fuel loophole" for flex-fuel vehicles (FFVs). This loophole allows carmakers to gain generous credits towards their CAFE standards for selling vehicles -- mainly big SUVs and pick-up trucks -- that are merely capable of running on E85. The fact that few actually run on E85 once they are bought seems to be beside the point.
Are oil companies really afraid of E-85, like "a goat is to a butcher knife"? I doubt it. Naturally, they don't want to incur any expense they don't have to (hence the subsidies to help them install E85 pumps), but as this interview suggests, they are otherwise agnostic. They know (or they should know) that a government policy that favors biofuels actually locks in the internal combustion engine as the dominant private-vehicle technology, making it harder for competing technologies (such as electric vehicles) to compete.
Rather than talk about a future in which switchgrass is grown on CRP land (which may or may not be a good thing), let's talk about the here and now. Thanks to incentives to expand corn production, prairies in the
" rel="nofollow">Northern Plains region are being ploughed for the first time, leading to the rapid destruction of valuable birdlife habitat and increases in soil erosion. Now that Iowa is planting about as much corn as it can, a lot of the expansion in corn production will come from less frequent crop rotation (corn-on-corn or corn-corn-soy instead of corn-soy), and expansion westward into lands where corn requires irrigation, drawing on fossil aquifers, such as the Ogallala.
That biofuel production is increasing around the world does not make it a great idea. In almost all countries, the biofuel production was started out as an extension of agricultural policy, and everywhere production or consumption is subsidized. When oil prices rose, the farm lobby was quick to push biofuels as "the solution" onto a gullible public looking for a quick, painless fix. For every study that you cite extolling the virtues of biofuels, I can cite you one that raises alarm.
There is no doubt a useful role for government support for some research into cellulosic ethanol (such as described in this article). My main beef is with production-linked subsidies. And in that respect, I agree with the title of this blog: "We Have Got To Stop Biofuel Subsidies Right Now".
April 23, 2007, 1:20 amRon Steenblik (Global Subsidies Initiative):
Rufus,
One other point: you note that higher corn prices "saved the Government (taxpayers) $6 Billion in unpaid farm subsidies" in 2006. Yes, subsidies were that much less in 2006 than in 2005. But that is in comparison with an exceptional year (a result of Hurricane Katrina). Higher prices reduce price-linked subsidies. But several billion dollars a year are still provided to corn growers through direct payments. And whatever savings may be made through reductions in commodity payments, they have a fixed value. Those savings are not scalable with increased biofuel production.
Moreover, high prices impose costs on other industries. Corn feed typically accounts for 40% of the cost of producing chicken meat and 40-50% of the cost of producing pork. While the cost of a box of corn flakes may rise by just a few pennies, the cost of chicken has risen by 6 cents per pound within the past year, costing the U.S. poultry industry as a whole an estimated $1.5 billion. One may argue that corn prices in 2005 were lower than production costs, and that is true. But one needs to keep in mind that a boon to one industry can be a bane to another.
If the ethanol boom were fueled by high oil prices alone, most commentators would just say, "Well, too bad for the poultry and pig industries; they're going to have to adjust". But the ethanol boom is government financed, and that makes all the difference.
April 23, 2007, 1:46 amrufus:
Well, Ron, the bottom line is, the price of oil is skyrocketing, and the world is moving toward biofuels. We're putting a little "subsidy" money in in the form of tax breaks just like we did with highways, railroads, airlines, oil drilling, nuclear, solar, textiles, sugar, rice, steel, and just about every other danged thing that you can think of.
It'll all work out fine, and your kids will look back at it some day and say, "What were they thinking?"
April 23, 2007, 10:28 amrufus:
Ron, take a look at this. Sweden builds world's biggest SNG Plant.
BTW, Sweden gets approx. 28% of ALL it's energy from bio.
In the same vein, Vinod Khosla is putting about $100 Million of his own money to build the first LARGE forest products to ethanol operation in Ga. this year.
April 23, 2007, 11:05 amrufus:
Ron, you need to look at biofuels as a "Suite" of products, and processes. Ex. You cited - Poultry, and Swine. Well, the newer plants are fractionating the corn kernel in such a way that they can produce Two types of DDG's. Of course what they're working on is "optimizing" the DDG's for poultry and swine, as well as cattle.
Perhaps, just as important, is the fact that they are using anaerobic digestion to convert livestock manure to methane, and, sometimes, electricity. This is, really, a pretty big thing. A cow produces well over a hundred dollars/yr in electricity (net.)
The DOE figures we have enough unused, AVAILABLE, biomass in the U.S. to produce almost 100% of our transportation fuels. Every time we walk through one door, another opens up. And, all this ignores the fact that Brazil has enough arable land lying fallow that they could power virtually every car and truck in the U.S. without chopping down a single tree.
Ron, when the price of oil went over $50.00 it opened up a whole new world. Metabolix was up 17% today on news that they are partnering with ADM to produce a hundred million tons, or some such, of Bio Plastics. This may not be a pure Hayek/Bastiat world, but you may as well just relax and learn to enjoy it. Buy some DE, and DD, stir in some ADM, and FWLT, stick a little Metabolix umbrella in it and dream about what you're going to do with your Next Fortune.
April 23, 2007, 11:26 amTJIT:
Rufus,
Ethanol usage is not only subsidized it is mandated. You keep ignoring the mandate which is what really drives the market.
You can cheerlead all you want but as currently produced ethanol is.
1. Bad for the environment
2. Energy negative
3. Unable to replace even a fraction of US oil consumption
4. One drought or crop failure away from implosion
5. Bad for the consumer. They get to buy more expensive fuel that gets fewer miles per gallon. They get to pay more for their food.
6. Bad for other sectors of the Ag economy, especially pork and poultry production.
Brazil is considered and ethanol sucess story. Around 70 % of the original ethanol plants there went bankrupt in the process of building the ethanol market there.
Many of the farmers investing in the current ethanol plant building boom are going to face bad financial problems when these plants start to go bankrupt.
The ongoing cheerleading for ethanol production is going to be partially responsible for this financial train wreck when it occurs.
April 23, 2007, 11:32 amRon Steenblik (Global Subsidies Initiative):
Rufus, I guess we'll have to agree to disagree. I do not consider a subsidy of upwards of $1.00 per gallon (the VEETC plus other federal and state-level supports) on an energy-equivalent basis, and on an open-ended volume, combined with proposed mandates (such as John Edwards', for 65 billion gallons a year by 2025) that could easily drive the subsidy to $33 billion a year, "a little money". A few billion for R&D on cellulosic ethanol I would accept as a (comparatively) "little money", however.
I agree with you that our kids will look back some day and say, "What were they thinking?" ... but in the opposite sense to what I think you mean.
Here is one indicator: I subscribe to daily Google alerts that find articles and blogs containing the words "ethanol" and "subsidies" (which is how I came upon this blog). A year ago, the majority of editorials and articles were hyping ethanol, extolling it as the "green bullet" or the "silver bullet" -- the answer to all the nation's farm, rural development, energy, driving, national security, etc. problems. Nowadays, the editorials are running at least 3:1 on the critical or sceptical side.
Let's agree to write back to each other in a year and compare notes.
April 23, 2007, 11:58 amRon Steenblik (Global Subsidies Initiative):
Rufus, I sent the previous post before seeing your additional ones. Great for Sweden that it has built an SNG demonstration plant. The topic of this blog, however, is open-ended production-related subsidies for liquid biofuels using already demonstrated processes.
And good luck to those ethanol producers who are experimenting with new formulations of DDGs. Whether they would even be engaging in such experiments in the absence of the existing subsidies is the question. Yes, $50/barrel opened up a new world, but to come back to my original point, I don't see the industry -- which has been living off of subsidies for almost 29 years -- saying, "Right, now we don't need the subsidy. Please, Congress, repeal it ASAP!"
You mention Brazil's capacity to "power virtually every car and truck in the U.S. without chopping down a single tree", but did I hear you say "so let's eliminate the 2.5% + $0.54/gallon tariff on Brazilian ethanol"? Was that meant to be implicit in your remarks?
April 23, 2007, 12:14 pmrufus:
Ron, the Brazilian guys have had their help. I'm of no mind to help them at the expense of American oil and gas producers. Remember, their ethanol is already receiving the $0.51 Tax Credit. The tariff just offsets that. Yes, I am lobbying in favor of American ethanol producers at the expense of American oil and gas; but, as I said, "Those guys have had their help, also." Remember the "oil depletion allowance?"
April 23, 2007, 1:03 pmrufus:
Oil is up $1.78/barrel, today.
TJLT, Every place ethanol has been introduced the air quality has improved, markedly.
Ethanol is very much energy positive. Follow me on this one. It takes less than ten gallons of fuel to grow one acre of corn. Figure 450 gallons of ethanol. In the newer plants the syrup is burned through "fluidized bed gassificatio" to drive the process. The Char is processed to make anhydrous fertilizer, which is used to grow the next acre of corn.
How much fossil fuel have we used?
We are using about 450,000 Barrels of Ethanol/day at present. This is getting close to 5% of our gasoline usage. We'll probably be getting around 7% by the end of the year.
The U.S. is a pretty big place. The whole country has Never gone into drought at one time. We have, however, had some really nasty hurricanes in the gulf, haven't we?
Even with today's shortages (due to the mandates you mentioned) ethanol is still cheaper than gasoline. It Will Get a Whole Lot Cheaper in a year, or so as a result of an enormous amount of capacity that is now under construction coming on-line.
Pork, and Poultry are doing just fine, thank you; and, the price of corn will come down over the next few months.
tjlt, if you're not in the petroleum business this is working very much to your advantage. Believe me, without some help from somewhere that Oil Oligopoly is going to eat you alive, starting pretty danged soon. Peace.
April 23, 2007, 1:36 pmRon Steenblik (Global Subsidies Initiative):
Rufus, come again? Ethanol is cheaper than gasoline? Not according to this article: "[T]he miles per gallon for flexible-fuel cars running on E-85 is 20 percent to 30 percent less than on gasoline. Yet the cost per gallon averages only 9 percent less." And that is in the Midwest! I would not expect a lower price for ethanol (on an energy-equivalent basis) to last for any appreciable period at any time.
Even your claim "every place ethanol has been introduced the air quality has improved, markedly" is disputed. Check out this recent study, for example.
But, let's assume ethanol does yield an improvement in air quality. Then why should the country be denying itself cheaper supplies from Brazil? (By the way, 2.5% + $0.54/gallon more than "just offsets" the VEETC, by 10-15%.)
Finally, if "pork, and poultry are doing just fine", why did the National Chicken Council, the National Turkey Federation and the National Pork Producers Council (not to mention the National Cattlemen's Beef Association and the American Meat Institute) send a letter to Secretary of Agriculture Mike Johanns on 18 January 2007 expressing concerns over the ethanol industry's sudden growth? Even if poultry farms in the Midwest tap into DDGs sources, that option is not available to poultry farms (especially egg producers) located outside the Midwest.
April 23, 2007, 2:55 pmrufus:
Ron, I guess they should have gone over to the Pacific Pride station at 3117 N. 22nd St, Decatur.
Most stations sell E-85 for about 20% less than unleaded. Like I said, There is a shortage of ethanol, right now; but prices will probably fall precipitously before the end of the year.
By the way, that Stanford computer program sounds a lot like the computer program that predicted that a 5% ethanol blend would cause more pollutiion (ozone) in L.A. It turns out, the result was just the opposite. We'll just have to see, but I have a funny feeling about this guy. I keep flashing on Patzek.
Ron, I've enjoyed chatting with you, but I'm wearing out. :) Have a Good'un.
April 23, 2007, 3:37 pmRon Steenblik (Global Subsidies Initiative):
Rufus, and I've enjoyed chatting with you (I appreciate especially your gentlemanly manners!), and am wearing out also. I'm serious, let's get in touch a year from now to compare notes. In the mean time, all the best to you!
April 23, 2007, 11:26 pmrufus:
The Same. I hang out over at Kudlows quite a lot.
April 24, 2007, 10:55 am