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How Badly Has Congress Screwed Up Ethanol?

And Who Will Bear the Cost?

Two years ago the Democrats in Congress and the Bush administration got together to deliver a payoff to farmers: they required refiners to use 15 billion gallons of biofuels by 2012. They did not expect that a crashing recession would lead to a reduction in the amount of gasoline the nation consumes – the first such reduction in years. And they also didn’t expect a White House to push so aggressively for higher-mileage vehicle fleets.

As a result of the changed circumstance, it looks like it will be impossible for Americans to use that much ethanol. Something has to give. But what?

Each potential solution would anger one interest group or another, so the agency has been subjected to fierce lobbying, including from members of Congress lining up behind various factions. One possibility is to raise the maximum proportion of ethanol in gasoline to 15 or 20 percent.

But that idea is opposed by some carmakers and pollution experts. They contend that high ethanol blends can cause damage to cars, including making catalytic converters run hotter.

The Alliance of Automobile Manufacturers says it believes this could cause the converters, components that help control pollution, to fail at around 50,000 miles. They are supposed to last for 120,000 to 150,000 miles. “We are sensitive to the issues facing the ethanol industry, but the government must make decisions based on sound science,” said Dave McCurdy, president and chief executive of the alliance, in a letter to the E.P.A.

Another possibility is that the agency could waive the mandates requiring use of a large volume of biofuels. But that would anger farmers, who sell a great deal of corn to ethanol factories, and the members of Congress who represent them. It might also undermine the efforts of companies that are investing millions in factories to make ethanol from waste materials, like corncobs, straw and garbage.

Had Congress trusted to the market to determine what fuels American cars use – and in what quantities – they would not now find themselves on the horns of a dilemma. Instead, they seem likely to force many Americans to pay for new catalytic converters, or to force more American farmers into bankruptcy. Given the instincts of the Obama administration, the White House response is sure to involve raining more taxpayer money on someone.
What happens with biofuels in the longer run seems likely to depend on how much control Washington exerts over the car market. The Times seems to suggest the best approach might simply be to force all of us to buy more expensive, less efficient fuel:

Perhaps the easiest way for the country to absorb all the excess ethanol would be to make wider use of an ethanol blend called E85, which contains 85 percent ethanol and 15 percent gasoline. Most cars on the road cannot use it, but in recent years, millions of “flex-fuel” cars have been sold, especially by General Motors. (Any car with a yellow gasoline cap can use E85.)

The problem is that at current prices, E85 does not make economic sense for drivers, and most of them use regular gasoline in their flex-fuel cars. That means gasoline stations have little incentive to install pumps for E85. The fuel can be found in the Corn Belt but is not readily available elsewhere in the country.

Gasoline was selling on average Thursday for $2.63 a gallon, while E85 was selling for $2.23 a gallon. That might make E85 sound like a bargain, but cars go fewer miles on a gallon of ethanol than of gasoline. Adjusted for that factor, E85 on Thursday was effectively 31 cents a gallon more expensive than gasoline.

A return of $4 gasoline might change things, by making E85 a relative bargain and spurring wider use. So would an unexpected spurt in total fuel demand. Otherwise, it is not at all clear how the nation’s coming surplus of ethanol can be absorbed.

As the first part of the article reminds us, the ‘surplus of ethanol’ that worries the Times didn’t happen by itself. It was engineered in Washington. The simplest solution would be to get Washington out of the car business – not just ownership, but also the heavy regulation of cars. If farmers were not induced to produce biofuels, it might help reverse the climb in food prices.
And besides, it’s becoming plainer and plainer that global warming isn’t a problem.
Cross-posted to TheConservatives.com

COMMENTS

  • DavidSage

    The main reason why we have this ridiculous subsidy is because the Presidential primary starts in Iowa, and every candidate has to kiss the ring of Iowa corn farmers.

    Conservatives should push to end all farm subsidies, it’s corporate welfare. This ridiculous notion of the family farmer scraping by is an illusion. Farming is now Big Business, and no different than any other large corporation.

    Here is a link to a map to show how many people in Manhattan (where there are zero farms) are getting agriculture subsidies.

    http://www.newwest.net/index.php/city/article/farming_park_avenue_farm_subsidies_from_manhattan_to_montana/C8/L8/

    • jamesmlowe

      The EPA and DOE are “sitting on” a major invention called the PreIgnition Catalytic Carburetor at this time that would extend and improve the use of ethanol as it is right now. They are forbidding it to come on the open market in the USA. They are deliberately stalling on it and NOT letting it be sold to Americans thereby keeping the price and efficiency of Ethanol artificially high. Tests have shown the test vehicle presented to the DOE and EPA to get Over a hundred miles per gallon from virtually any ethanol mix. Ethanol could be used in even higher mixtures than already exist PLUS all the fuel is burned in the engine making SUV, Pickup trucks and regular cars give off NO pollution and water vapor pure only. Is the government stupid, paid off or what?

      • mschmitt

        … just trying to scam people into buying your amazing do-nothing miracle product? Just wondering…

        • mschmitt

          answered [Link Edited - NS] my own question.

          • Vladimir
      • http://www.hakubi.us/ Neil Stevens
  • RedBeard

    No one could see anything like that coming. I mean, Congress (infinitely wise) is just loaded with top experts on everything imaginable, so this result is startling.

    Perhaps another mandate, plus a couple of new taxes… yes, I’m sure that will fix everything.

  • E Pluribus Unum

    To the HUGE majority of wha t ails America.

    • antisocial

      I do not undertake to promote welfare, for I propose to extend freedom. My aim is not to pass laws, but to repeal them. It is not to inaugurate new programs, but to cancel old ones that do violence to the Constitution, or that have failed in their purpose, or that impose on the people an unwarranted financial burden.

      - The Conscience of a Conservative

      • E Pluribus Unum

        That generation of conservative giants — Goldwater, Buckley, Kirk, and Reagan — had an amazing amount of wisdom.

  • TXCHLInstructor

    Ethanol is at best a mediocre fuel, and corn is probably the least economical feedstock available.

    Political Correctness makes for lousy economics, bad policy, and even worse science. But explaining that to a Liberal is like talking to a brick wall, except that the brick wall is usually better-behaved.

    Corn ethanol was never really intended for anything other than vote-buying in the 2008 election, so corn farmers can expect to join “Rev” Wright under the bus fairly soon now.

    • Warrior

      See my diart entitled “The Case Against Ethanol” by following the link below.

    • LDahl752

      ethanol was promoted and subsidized, wasn’t it? I remember reading a couple of years ago of the rising concern about the diversion of corn to ethanol production would lead to global food shortages. And I know of ethanol plants being built in Minnesota nearly ten years ago.

  • http://impudent.blognation.us/blog kyle8

    Agricultural subsidies hurt the taxpayer in several ways. They raise the cost of food. They raise the deficit. They favor large corporations over small farmers. They undercut developing nations who rely on agriculture imports.

    And corn subsidies are the worse because they have caused corn syrup to replace other types of sweeteners, (there are some studies that link it to obesity) and of course, ethanol is simply not very cost effective at all as a fuel.

    Republicans should stand up four square against this form of corporate welfare.

    • ststeever

      how they feel about gov’t involvement in everything they do. Or read the following. If you are a conservative, please consider that there are heck of a lot of farmers that are on your side, and they don’t all wear corn rings.
      _____
      NDFB Says No to Farm Payments — In a vote for less government intrusion, delegates to the North Dakota Farm Bureau annual convention passed policy stating that all government farm program payments should be eliminated. “Our people were adamant that darn near everything that’s wrong today in our country is wrong because government’s got their fingers in too much of what we do,” said NDFB President Eric Aasmundstad, “To me, this is a heck of a strong statement that just says let us do what we do best and get out of our hair, and no, we don’t want your money either.” Aasmundstad says the policy against farm program payments was driven by young NDFB delegates.
      ____
      The following statement was issued November 21 by NDFB President Eric Aasmundstad:

      ?Delegates to the North Dakota Farm Bureau convention unanimously approved a policy at the 67th annual convention and requested that it be sent immediately to the Senators Kent Conrad and Byron Dorgan.

      ?The policy is as follows:

      We oppose a government takeover of the health care system, support tort reform and free market competition, oppose socialization of medical health care option, and oppose inclusion of any public option of national health care.

      U.S Representatives and U.S. Senators who are creating a nationwide health care program should be required to also be covered by that nationwide plan.

      “Our membership has spoken very clearly on this issue, and the message was sent today following the conclusion of the delegate session.”
      ____

      Read it in full here:
      http://www.ndfb.org/news/default.asp?ID=494

  • johnt

    There must be something about failure and flops that liberals like and that I’m missing.

  • rbdwiggins

    how it makes economic sense to burn ones own food supply.

  • Vladimir
    • Third Street
  • qixlqatl

    That it takes more than a gallon of diesel fuel to grow enough corn to make a gallon of ethanol. Isn’t diesel the (much) more efficient fuel?

    • phred

      And in the bargain we also get a tortilla revolt.

  • http://UnitedConservativesofVirginia Cargosquid

    ?We are sensitive to the issues facing the ethanol industry, but the government must make decisions based on sound science,? said Dave McCurdy, president and chief executive of the alliance, in a letter to the E.P.A.

    Sound science? Governmental decisions? Please.

    Btw, ethanol is drinkable unless poisoned. Hmmm, THAT’S another government idea. God forbid these ethanol distillers get into the bootlegging, um, adult beverage business….

    • DONTREADONME
    • JoeG

      The federal government insists that ethanol is poisoned unless a consumption tax is paid.

      The federal government would rather poison you than let you get away with tax evasion.

  • freetexan

    The current “E10″ gasoline we have here destroyed a fuel pump and fuel pump assembly in 3 years on a 2003 Mazda I own. I suspect I’ll be replacing it again soon, unless the aftermarket I installed was built from better quality materials.

    I also have a 2008 F150 with the Trition V8 (flex-fuel). Running E85 is a joke. The decrease in mileage doesn’t make it worth running. It’s more cost effective to pay #2.40/gal for regular gas than $2.05/gal for E85. Went from getting around 13MPG with gasoline to about 8MPG with E85!

    Tried the E85 fuel for 2 weeks because a nearby Kroger carried it.

  • http://xmmlbchat.blogspot.com katesmith

    Last winter schools had to be closed in a part of Minnesota due to school buses with biofuel (state mandated) breaking down. School children the previous day had been left freezing at bus stops. From what I’ve read, the governor of Minnesota is big on biofuel.There have been other stories of biofuel causing engine break downs in cold weather.

    • phred

      Let’s not stop at making the poorest choice of fuel for near-Arctic conditions. Wait a minute, we haven’t stopped at that, there’s, cap’n'tax, and socialized medicine.

      Who sez Europe has got the market cornered on mediocrity.

    • LDahl752

      It happened in a Twin Cities suburb. So, they decided to leave them running overnight. How’s that for an efficient use of fuel?

  • http://www.nighttwister.com NightTwister

    Much of the Eastern Plains of Colorado is corn farms, and ethanol has already become a hot issue in the Republican Primary. Cory Gardner has been supportive of ethanol processing, but against direct subsidies for farmers. In a recent forum in Loveland he was questioned about this and had to set the record straight that he has never supported legislation to give handouts to farmers.

    • tinkerbell2479

      Gardner did support the bill which mandated that all gas contain 10% ethanol – direct subsisdy no but government interference in the free market absolutely.

      He also worked with Ritter on the Energy Office which is pushing the windfarm “green energy job” – maybe he should have talked with Pickens first who lost an enormous amount of money trying to make wind energy work.

      He also added an amendment to the energy office bill to fund universities in the area of energy – how about letting the free market do this instead of subsidizing higher ed??

  • RedBeard

    When I bought my GMC Sierra a couple of years ago, the dealers were falling all over themselves trying to push “Dual Fuel” vehicles that would run on E85. One dealer had about 15 trucks with the E85 option and only one without.

    I finally bought at a small-town dealer that had no E85 trucks in inventory, and no intention of stocking any. Seemed like a sensible bunch of people there.

    Sorry boys, you E85 cheerleader dealers paid your fare but got on the wrong train.

    • JoeG

      Wifey’s minivan is E85 capable, but I’ve never run E85 in it, it has only seen E10.

      • mbecker908

        on E85 is significantly higher than the cost to drive with gasoline. The mileage is significantly lower with E85. The exhaust is apparently hotter than with gas and the catalytic converter will likely go away in about 50K miles as opposed to 160K with gas.

        Oh, and have you found a pump that sells E85?????

      • http://impudent.blognation.us/blog kyle8

        certain parts like O-rings that might corrode with high alcohol fuel are made from more expensive products that are more corrosion resistant.

        • JoeG

          I assumed that the computer must have a sensor to identify the fuel mix and adjust the mixture and timing as needed to run right on higher alcohol mixes.

  • youthgrunt

    In typical government fashion, they have it more screwed up than just a silly subsidy and a messed up mandate. The EPA is trying to release the new version (RFS 2) that will create 4 types of renewable fuels that will be mandated–one of which is not even in production now. (Yes, we will be required to make blends of fuels that cannot be produced). How do you do that, you ask? Well, you buy credits that the EPA will create out of thin air.

    But it’s not a tax.

    • ubetcha

      And it does run pretty smooth in a diesel motor. I hear the ones with a “pre-combustion” chamber are preferred like the v-8 put in the Fords that was made by international.

      • youthgrunt

        first, does not lubricate adequately and will dramatically shorten the life of your engine. Second, cooking oil would probably fill the place that Soy Biodiesel fills, but that does not satisfy the RFS 2 demands.

        By the way, if you use higher than 5% biodiesel, your engine manufacturer will probably not honor your warranty.

  • Warrior

    Is one of my diaries, just follow the link below…

    Also, Iain Murray wrote a fantastic book with an excellent chapter devoted to de-bunking biofuels. It’s entitled, “The REALLY Inconvenient Truths” and is published by Regnery.

  • mosander

    Once again the political establishment should stay out of rearranging fuel. Ethanol gas has cause the destruction of many lawnmowers, marine motors and weed whackers. Why? Because ethanol causes O rings and fuel lines to swell rendering operation impossible. It is not good for automobiles either. Marine and aviation fuel does not contain ethanol because of this. Most people operating small engines just buys from a regular gas pump. A good mechanic can fix these engines, but most people just throw them away. I know because my husband retrieves them and fixes them. A better solution is biodiesel for DIESEL vehicles. It is clean, smells like french fries and is much less poluting. Hard to use in cold weather without preheaters.

  • mschmitt

    This would never be a problem for them.

    Perhaps the easiest way for the country to absorb all the excess ethanol…

  • olddog

    design cars and fuels and economies,. is like letting non military C.I.C.’s design battle plans, incrementally like Nam ,like Afghanistan etc..
    Yeah that’ll work!!! How’s that change working for you?
    One Old Dog