28 Aug

Ethanol Mandates – the poster child for zombie government programs that never die – regardless of the damage they do [Reader Post]

                                       

By definition humans are imperfect. Some are more imperfect than others however. Nature has provided us with a mechanism to reduce the most imperfect among us. That mechanism is sometimes chronicled in something called the Darwin Awards. My favorite Darwin award of all time involved a thrill seeking man who strapped a solid rocket booster to his car in an effort to see how fast he could go. He went quite fast, in excess of 300 miles per hour actually… but, shockingly, the brakes for his car eventually disintegrated and he met his end after crashing into the side of a cliff. Thankfully nature’s lessons do not always end so… drastically, usually the only injuries are a few broken bones, a smaller bank account and maybe some wounded pride.

And that is the beauty of humanity. We often learn from our mistakes. We often learn from our experiences in order to make adjustments or better decisions going forward. Unfortunately, although government is made up of humans, it does not share that same skillset.

There is possibly no better example of this than the debacle that is Uncle Sam’s ethanol obsession. Since the Carter administration the government has been diverting your dollars to put ethanol into your gas tank. Initially it was intended to be a tool to help the United States become energy independent, it then morphed into a tool to help increase gas mileage and later it became a critical element in fighting global warming. Now it doesn’t even do any of those dubious, but theoretically positive, things. It’s simply become another failed government wealth transfer program.

The Wall Street Journal states: Corn is also a key ingredient in the combine of political power and corporate welfare that is U.S. alternative energy policy. The food-to-fuel mandate is known as the Renewable Fuels Standard (RFS) and requires 13.2 billion gallons of ethanol to be blended into the gasoline supply this year and 36 billion gallons by 2022. These quotas are fulfilled almost entirely by corn ethanol.

Ethanol is an industry that enjoys no natural market. The only reason the ethanol market exists in the first place is because of government mandates. And who are the beneficiaries of this corporate welfare that is funded out of your pocket? Mainly members of the farm / finance / producers cabal in the form of the Renewable Fuels Association. This advocacy organization that is simply trying to save our planet is made up of an array good hearted companies that are just too fragile to survive without Uncle Sam’s largesse with your money. Among these are food processor ADM (Rev = $80 Billion, #28 on the FORTUNE 500), transportation company CSX ($11 Billion, #226) and energy companies Kinder Morgan ($8 Billion, #311) and Noble Group ($80 Billion, #139 on the Global FORTUNE 500). This ethanol boondoggle translates into a $45 billion industry… money that comes out of your pocket and could be spent elsewhere if it were not being, literally, set on fire.

The worst part of the entire ethanol fiasco is the fact that not only does it not achieve any of its stated – and oft changing – objectives; it actually causes a wide array of unintended consequences – none of which are good. Number one is the fact that it drives up the cost of one of the most important foodstuffs in the world, corn, the price for which is up almost 300% over the last decade. That in turn drives up the price of virtually every other thing in the economy, from food to transportation to plastics. Then there’s the fact that ethanol damages engines and that the patchwork of ethanol standards across the country causes unnecessary price spikes and shortages. If all of that weren’t enough, ethanol has even scared off much of – but not all – of the anti-capitalist environmental lobby because – among other things – it drives deforestation on a wide scale around the world.

Finally, and most heartbreakingly, the ethanol mandates have driven the prices of American crops to near record levels, resulting in greater hunger in developing nations. One way they do this is to encourage farmers to switch to more profitable corn, which results in less wheat, oats, etc. to meet demand. This in turn results in less food making it into the stomachs of poor children around the world. In a nutshell, the mandates make everything in our economy more expensive, do little to alleviate our energy conundrum, actually harm the environment and make dollars donated feed the hungry not go as far. That seems like a policy that screams to be abolished.

Which brings us back to the Darwin Awards. If government programs operated the same way that humans do, at some point they would die as a consequence of their abysmal failure. Unfortunately however, they are not. Instead they keep on trudging down the same path and, indeed in this case the EPA keeps setting increasingly high ethanol standards that will double the amount of food wasted over the next decade. Of course like a potential Darwin Award candidate who stands on the roof contemplating jumping off to test his plastic wings, the EPA does have the option of stepping back from the ledge. It has the power to issue waivers to the ethanol mandates in emergency situations. One might imagine that the litany of problems caused by the mandates, when combined with the worst drought since the Great Depression, would qualify as just such an emergency. But of course the EPA is government and thus you’d be wrong.

At the end of the day the tragedy of ethanol clearly demonstrates the folly of big government. More than anything the element of common sense is replaced by catastrophic regulations imposed by greedy politicians and enforced by power hungry bureaucrats. In a sane world the ethanol mandates would have been history two decades ago. In the insane world of government however they are not only surviving, they are thriving. One only wishes you could say the same of the average American taxpayer, or more consequentially, the children in Africa who are going to be hungrier as a result of another reckless government program that lives on like a zombie long after it should have been dead and buried.

Crossposted from Imperfect America

About Vince

The product of a military family, growing up in Naples, Italy and Guantanamo Bay, Cuba, and being stationed in Germany for two years while in the Army, Vince spent half of his first quarter century seeing the US from outside of its own borders. That perspective, along with a French wife and two decades as a struggling entrepreneur have only fueled an appreciation for freedom and the fundamental greatness of the gifts our forefathers left us.
This entry was posted in Economy, Energy, Politics and tagged , , , , , , , , , . Bookmark the permalink. Tuesday, August 28th, 2012 at 9:00 am
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18 Responses to Ethanol Mandates – the poster child for zombie government programs that never die – regardless of the damage they do [Reader Post]

  1. Hard Right says: 1

    More good news (sarc)

    http://hotair.com/archives/2012/08/18/court-rejects-challenge-to-epa-e15-ethanol-waiver/

    So tell me lefties, as this E15 will hurt the little guy, you are against it? Right?

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  2. Randy says: 2

    E-15 will damage some types of engines. The current 10% damages the catalytic converters on some cars. That costs hundreds of dollars to replace.

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  3. johngalt says: 3

    The use of corn-based ethanol has had many damaging side effects, not the least of which has been the increased costs of everything from foodstuffs to packaging. Also, crop rotation has changed dramatically as well, with many farmers choosing to go two, three, or more seasons of growing corn before switching off to soybeans. One has to wonder if this affects the yield each season that is added without the alternating soybean crop included.

    As well, economically, the use of corn based ethanol makes no sense if one considers that an alternate crop of switchgrass provides higher yields, a purer, less acidic form of ethanol, and that three or four crops per growing season can be harvested.

    Crony capitalism is the reason corn-based ethanol is such a big industry.

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  4. Greg says: 4

    Saudi muslim scholar calls ethanol fuel use a sin.

    In the Koran the Prophet Mohammed set out clear rules for Muslim interaction with alcohol, forbidding the use, purchase, sale, service, transportation or even manufacture of the substance. And that’s the basis a Saudi Muslim scholar is using to call ethanol use by Muslims a sin.
    . . .
    A scholar at the Saudi Islamic Jurisprudence Academy, Sheikh Mohamed Al-Najimi, is the source of the warning – he’s been careful not to call it a fatwa – about the use or involvement with ethanol fuel, reports MarketWatch. The story began with the scholar warning students traveling outside Saudi Arabia not to use ethanol powered vehicles.

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  5. Nan G says: 5

    One other point, skipped over in that good article:
    The UN Asks US to Suspend Biofuel Mandate.
    The UN says meeting the quota could contribute to a global food crisis. Jose Graziano da Silva, director general of the FAO, says suspension of the quota would allow more of the crop to be diverted for food production.

    But not just the UN….
    The UN and environmental NGOs have jumped off the ethanol bandwagon.
    The Grocery Manufacturers Association, too.
    Ken Powell, the chief executive of General Mills, has also spoken out against the policy, as has Peter Brabeck-Letmathe, chairman of Nestlé, the world’s largest food producer.

    The bottom line: Obama’s biofuel mandate is hurting poor people right now!!!

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  6. mathman says: 6

    The brief commentary above does not begin to chronicle the problems with ethanol.
    It takes diesel fuel to plant, fertilize, cultivate, spray, and harvest the corn. It takes more diesel to move the corn to the ethanol factory. It takes still more diesel to perform the conversion, It is estimated that the exchange is 1.3 gallons of diesel needed for 1 gallon of ethanol.
    The shift of cropland from other crops to corn has resulted in a decrease of soybean planting. Soybean is a big export crop. As a result, massive soybean farms have been established in South America, resulting in catastrophic removal of tropical rain forests.
    Enormous amounts of water must be diverted from other uses to the growing of the corn, and more water diverted to the factories making the ethanol. A huge amount of land is removed from use for producing food in order to make the ethanol.
    Only a government could waste so much on something so ridiculous.
    Ethanol production has produced a significant rise in the bribing of members of Congress. The members from Iowa and other states have become totally dependent on ethanol for campaign contributions.
    But don’t worry. The U S Navy is going all biofuel by 2020. Forget about balancing the budget.
    When the inquiries come, it will make Teapot Dome look like a game of tiddlywinks played by Congressional Aides.

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  7. Greg says: 7

    Regular gasoline typically contains around 10 percent ethanol.

    What do we think will happen to gasoline pump prices if domestic ethanol production is suddenly curtailed?

    What will become of the 500,000 U.S. ethanol industry related jobs?

    BTW, the ethanol mandate schedule didn’t originate with Obama, nor did it originate with a democratic congressional majority. That came with the Energy Policy Act of 2005, passed by republican majorities in the House and Senate and signed into law by a republican president. The Energy Act of 2007 strengthened the commitment with a more aggressive schedule.

    The solution to the many obvious negatives of using corn as an energy industry feed stock may turn out to be cellulosic ethanol.

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  8. johngalt says: 8

    @Greg:

    The solution to the many obvious negatives of using corn as an energy industry feed stock may turn out to be cellulosic ethanol.

    I agree, and as I said about switchgrass, it makes much more sense economically than continuing to use corn as the feedstock.

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  9. Thomas Maddox says: 9

    The EPA should be one of the first agencies Romney needs to reign in right after the TSA and the DHS. Romney will be a busy man after his swearing in, taking out the trash the Obamas leave behind, cleaning up the nasty mess their staff will have deliberately made and repealing the Obamatax.

    The Environmental Protection Agency has slapped a $6.8 million penalty on oil refiners for not blending cellulosic ethanol into gasoline, jet fuel, and other products. These dastardly petroleum-mongers are being so intransigent because cellulosic ethanol does not exist. It remains a fantasy fuel. EPA might as well mandate that Exxon hire leprechauns.

    As the nearby screen shot of EPA’s relevant website confirms, so far this year — as in 201l — the supply of cellulosic biofuel in gallons totals zero.
    “EPA’s decision is arbitrary and capricious,” said Charles Drevna, president of American Fuel and Petrochemical Manufacturers (AFPM), the Washington-based oil-refining-industry association. “We fail to understand how EPA can maintain a requirement to purchase a type of fuel that simply doesn’t exist.”

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  10. Greg says: 10

    Romney will be a busy man after his swearing in, taking out the trash the Obamas leave behind, cleaning up the nasty mess their staff will have deliberately made and repealing the Obamatax.

    Obama admin: New fuel standards would double average gas mileage of cars, light trucks

    I suppose Romney might take that out as well. Although you would never guess it, judging from what he was saying back in 2007.

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  11. Nan G says: 11

    Romney proposes to deregulate the industry so that the EPA has less influence over greenhouse gas emissions.
    He says emission standards should be left up to the state.

    Romney is not a supporter of climate change theory.
    He admits to noticing some of the environmental changes that are happening, but is unsure how much of that exactly is caused by humans.

    Romney supports higher CAFE standards [not as high as the ones Obama has set] but believes that emissions will get better without government involvement.
    http://electful.com/candidate/mitt-romney/issues/energy-and-environment#footnote1_4dul75o

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  12. warner hyde says: 12

    As a motorcycle rider it’s worse for me. On pure gas my bike gets 47 MPG.. on the ethanol crap i get 40 MPG, on a four gal tank that’s 28 miles less per tank. I fill up twice a week, so i lose 2912 miles a year because of ethanol.

    There is only one gas station in my county that sells pure gas and it’s just over ten miles away, So i have to buy ethanol blocker from the dealership and keep it in my saddlebags for when i fill up at other places. So now i’m paying tax money to put ethanol in the gas, AND paying money for an additive to take it out…..

    Wait it gets worse..ethanol is so bad for boat and motorcycle engines, that some of the dealership are now putting warnings on the bikes that using the fuel untreated VOIDS THE ENGINE WARRANTY. In this economy i can’t afford a new bike but if i could i would have to treat every gallon that goes into the tank, because a tech told me they could tell by the scarring on the inside of the aluminum heads how much ethanol was burned.
    W

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  13. Nan G says: 13

    @Greg: Saudi muslim scholar calls ethanol fuel use a sin.

    In the Koran the Prophet Mohammed set out clear rules for Muslim interaction with alcohol, forbidding the use, purchase, sale, service, transportation or even manufacture of the substance. And that’s the basis a Saudi Muslim scholar is using to call ethanol use by Muslims a sin.
    . . .

    An oil-rich Saudi might SAY that, Greg, but what does the Koran actually say?
    The implication in the verse I am going to share (in various English translations) makes it clear that Muslims can DRINK!
    If they can drink, they certainly can “use, purchase, sale, service, transportation or even manufacture,” alcohol as well…..
    Verse (4:43) sūrat l-nisāa (The Women)
    Sahih International: O you who have believed, do not approach prayer while you are intoxicated until you know what you are saying…
    Pickthall: O ye who believe! Draw not near unto prayer when ye are drunken, till ye know that which ye utter….
    Yusuf Ali: O ye who believe! Approach not prayers with a mind befogged, until ye can understand all that ye say….
    Shakir: O you who believe! do not go near prayer when you are Intoxicated until you know (well) what you say….
    Muhammad Sarwar: Believers, do not pray when you are drunk, but, instead, wait until you can understand what you say….
    Mohsin Khan: O you who believe! Approach not As­Salat (the prayer) when you are in a drunken state until you know (the meaning) of what you utter….
    Arberry: O believers, draw not near to prayer when you are drunken until you know what you are saying…

    I other words, Muslims CAN drink.
    They simply should not go to prayers so DRUNK they cannot be understood…..way beyond one drink!

    Modern-day Sharia, such as the Saudi opined, goes well beyond what is written, relying on the ignorance of the world’s 90+% of Muslims who can recite from rote the entire Koran while not understanding a word of the ancient Arabic in which it is written!

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  14. Pingback: When will the nonsensical ethanol fuel mandates ever end? - VolNation

  15. S Baker says: 14

    Yep, an alliance with the left to attack the nations #1 industry, #1 export, and non-union farmers who are working their butts off. Let’s don’t attack the fat welfare scabs sitting on their cans and screaming for more free food. Obesity is the #1 health issue in the country, but hey, let’s make food more available while vilifying hard working non-union members because they get tax breaks; and, call it corporate welfare, another hackneyed phrase of the left, used to condemn anyone or any industry getting to keep more of what they earn and produce. If we end this tax-break then we end them all, not just the ones for the non-union workers.

    In the meantime I am happy to see money flow to farmers and redstates instead of to foreign energy sources and the blue states.

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  16. Liberal1 (objectivity) says: 15

    Most of those shortages because of usage of edible corn did occur during the Republican administration—previous to the Energy Act of 2005, our ethanol needs were served by non-edible corn products. Obama recognizes this problem and is trying to use more resources outside the food chain for ethanol production.

    In that sense then, we have learned from our experiences.

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  17. From mathman, comment # 6:

    It is estimated that the exchange is 1.3 gallons of diesel needed for 1 gallon of ethanol.

    ‘Nuff said.

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  18. Randy says: 17

    @Liberal1 (objectivity): Not until after the election!

    ReplyReply

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