Ethanol Mandates – the poster child for zombie govt programs that never die

Flopping Aces ^ | 08-28-12 | Vince

[Starman417]

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.

[Steely Tom]

"The British created a civil service job in 1803 calling for a man to stand on the Cliffs of Dover with a spyglass. He was supposed to ring a bell if he saw Napoleon coming. The job was abolished in 1945."

-- Robert Sobel

[theBuckwheat]

Ethanol mandates have the economic effect of putting fuel uses of corn in front of all other uses, and of forcing ethanol blenders to pay whatever price for the corn they must buy in order to refine the amount of ethanol necessary to meet fuel needs. This ties the price of corn to the market price of oil.

Since chicken and to some extent beef and hogs are feed so much corn, the price of their meat is strongly related to the price of oil.

Because of the fact that ethanol is at best a marginal improvement on the issue of “sustainability”, and because it is just silly to burn such a high percent of the corn crop, these mandates should be eliminated entirely. If ethanol-blended motor vehicle fuels are such a great idea, people will buy them anyway.

[Neoliberalnot]

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.

[Neoliberalnot]

Now buckwheat, don’t forget, as the left-wing and arab oil countries forget, the EtOH process also produces a high-protein by-product that is fed to the livestock you mentioned. 60% of the budget is going to handouts for the non-productive, and you leftists feel the need to target the nation’s most productive industry and major export.

[Vide]

Bush needed high oil prices to encourage development of domestic supplies: it worked.

He then needed high soft commodity prices to narrow the balance of trade deficit caused by the high price of imported oil. Hence bio-fuel subsidies: they worked. They didn't work in the literal sense that they encouraged end-use of bio-fuels, but they worked in the Machiavellian sense - they transferred $ from Egyptians to mid-Westerners.

The icing on the cake should have been the "Arab Spring" triggered by 17%+ food price inflation. Obama (and Hillary) botched it.

The Ethanol/Biofuels scam shouldn't be unwound until the US is aggressively exploiting fracking and shale oil, and oil imports are greatly reduced.

In the mean-time, I'm happy to see $ flow from unfriendly foreigners to the pockets of farmers in the mid-West.