Monday, July 26, 2010

Major Newspapers Urge an End to Ethanol Subsidy

By Alan Caruba

On Friday, July 23, the Chicago Tribune published an editorial titled “Enough Ethanol” and on Saturday, July 24, The Washington Post editorial said, “It’s time to end the excessive subsidies for corn ethanol.” On Monday, July 26, The Wall Street Journal joined the chorus.

“The best refutation of the theory of the survival of the fittest is probably the corn ethanol lobby, whose annual $6 billion in federal subsidies have managed to outlive both its record of failure and all evidence and argument,” said The Wall Street Journal.

The ethanol subsidy is on the front burner for Congress because it is due to expire and Sen. Jeff Bingaman (D-NM), Chairman of the powerful Senate Energy and Natural Resources Committee, has expressed support for cuts to the tax credit program. A twenty percent cut (nine cents per gallon) is being debated in the House Ways and Means Committee.

Jimmy Carter’s belief that ethanol could replace or reduce dependence on foreign oil imports and reduce greenhouse gas emissions was totally bogus. Nothing about converting corn to fuel makes any sense at all. In July 2007, I laid out the facts, quoting E. Ralph Hostetter, the publisher of American Farm Publications.

“Today, 60 percent of the American corn crop is fed to U.S. livestock,” noted Hostetter. “Therefore, as the price of corn is forced up by the demands of ethanol production and many natural causes such as weather, so is the price of meat, poultry, eggs, milk and more than 3,500 products American use every day.”

I noted that, “Among the products affected by the rise in the cost of corn are cake mixes, pizza, beer, whisky, candies, cookies, corn flakes, cosmetics, instant coffee, carbonated beverages, fertilizers, vitamins, tires, toothpaste, paper products, pharmaceuticals such as aspirin and more than 85 different types of antibiotics. And that’s just a short list.”

The Washington Post looked at the cost to the consumer in the form of “decades of subsidies the government has showered on the corn ethanol industry.” It suggested that “The debate should be about why corn ethanol deserves any federal protection at all.”

Little known or understood is the fact that the federal government gives “companies that combine corn ethanol with gasoline a 45-cent tax subsidy for every gallon of corn ethanol added to gasoline.” The result is that the cost of replacing a gallon of gasoline with one of corn ethanol is $1.78. “The tax incentives alone cost the Treasury $6 billion in 2009.”

What does the consumer get? For every gallon of a gasoline-ethanol mix, the price includes less mileage. Ethanol is a poor source of power. FlexFuel vehicles run on E85 or 85% ethanol and, according to the Department of Energy, they get about 25% less mileage than a car fueled by undiluted gasoline.

For those still worried about greenhouse gas emissions, ethanol emits carbon dioxide and, since natural gas or coal is used to produce ethanol, it ends up putting more CO2 into the atmosphere than the production and use of gasoline.

The Congressional Budget Office concluded that supporting ethanol through subsidies means that taxpayers are shelling out about $750 for every metric ton (2,205 pounds) of carbon that, in theory, is kept out of the atmosphere.

It gets worse. I have not read or heard a single climatologist or meteorologist who believes that carbon dioxide plays any role whatever regarding the bogus global warming. As I frequently remind readers, there is no global warming. The Earth has been cooling, due to natural factors, for the past decade.

This is why, behind the scenes, the producers of “clean” or “alternative” biofuels are in a state of panic. There is no justification for ethanol, no matter whether it is produced from corn or cellulose. The same goes for biodiesel fuel.

Who keeps insisting on raising the mandates for the use of these “green” fuels? The Environmental Protection Agency.

Slowly, in the wake of the huge financial disaster called the United States of America, costly former priorities, many sold on the basis of stopping the dreaded global warming, are finally being examined by newspapers and other media. It’s only taken since the late 1970s to finally get around to it, but better late than never.

© Alan Caruba, 2010


LarryOldtimer said...

Alan, you are going to confuse a lot of people if you use facts, most unfortunately. And the farmers in the Midwestern states aren't going to stand for any rdeuction in any farm subsidy, if they can do any political thing about it. They have long since become dependent on the federal government for farm subsisies. I was growing up on a farm and then living in a small town in Iowa when it mostly all began.

The federal government paid for and when full, sealed, chain link corncribs, out in the natural elements, until the corn inside rotted away. Had one of those on our farm, back in the 1940s, after WWII ended.

TexasFred said...

Corn is for dinner, and an occasional jug of *shine*...

Rich Kozlovich said...


Escellent article. Another home run. It will be featured as the lead commentary in Friday's newsletter.

Rich K.

Guy said...

The whole Ethanol industry is just a copycat attempt, based on a concept that is fundamentally flawed....

Brazil and other countries have been making a lot of Ethanol for a long time, but it's only viable there because they have a virtually endless supply of waste sugar cane. Aging sugar cane plants, which used to be cut down and burned every so often before re-planting, are very high in sugar. Sugar lends itself to easy fermentation into Ethanol, so cutting the old cane down and fermenting it into Ethanol spares the countryside from the clouds of smoke the burns used to produce, and produces a fuel as a byproduct. It's a win/win solution for those countries.

Unfortunately, we don't have vast fields of sugarcane to work with. The most abundant crop WE have is corn, and corn is high in carbohydrates, not sugar. Carbohydrates have to be digested to produce the sugars necessary for fermentation. That extra step requires a lot of time and energy, making the whole process very inefficient.

It's a simple case of wishful thinking on the part of some politician or scientist. They saw what seemed like an easy solution, and tried to copy it here. It works in Brazil, so it must work here, right?

Just like solar or wind power, converting corn to Ethanol WORKS, but it simply cannot compete economically with our abundant supplies of fossil fuels. Only when our tax dollars are used to offset the difference in production costs can these energy sources even come close to competing....

Continuing to subsidize them is foolish. I'm all for spending that money developing alternative energy sources that make economic sense. We can start using them when, and if, they prove to be viable. Until then, we need to quit putting the cart before the horse and throwing money down the drain on technologies that cannot compete...

Carolyn said...

All I know, Mr. Caruba- is that pork (the other white meat) has gone up more than 5.00 a pound here. I can't even afford beef, and we spend about 14.00 a week on milk. Michelle Obama is so hot on people eating right. Sure, no one will be able to afford food at all, so again, there will be less of a population due to starvation, so the mythical greenies will have their way.
God Bless.