Skip to comments.Oh my: Senate votes to end ethanol subsidies, 73/27
Posted on 06/16/2011 6:46:47 PM PDT by SeekAndFind
Yesterday’s vote failed for procedural reasons but they cleaned it up today and nailed down a remarkably bipartisan consensus. Eyeball the roll: 38 Democrats, 33 Republicans, and both independents voted yes, with no votes coming mainly from plains-states senators eager to keep the campaign cash flowing. When you’ve got both senators from California and both senators from Oklahoma on the same side of an issue, you’re working magic, my friends.
The vote also could have ramifications on future votes to reduce the deficit. Much of the GOP conference supported Feinstein’s bill even though it does not include another tax break to offset the elimination of the ethanol tax credit.
As such, the vote could also represent a setback for influential conservative Grover Norquist, head of Americans for Tax Reform (ATR), who said a vote for the plan would violate the anti-tax pledge most Republicans have signed unless paired with a separate tax-cutting amendment…
Feinstein’s amendment to an economic development bill would quickly end the credit of 45 cents for each gallon of ethanol that fuel blenders mix into gasoline. The credit led to $5.4 billion in foregone revenue last year, according to the Government Accountability Office.
The amendment also ends the 54-cent per gallon import tariff that protects the domestic ethanol industry.
It was a vote about ethanol but it wasn’t really a vote about ethanol. For instance, although this bill would strip away federal subsidies, it does nothing about the federal mandate specifying U.S. consumption of 36 billion gallons in “renewable fuels” each year until 2022, which means there’s plenty of business still to come for ethanol special interests. What the vote is really about, at least to the Norquistians among us, is whether this might signal a new willingness by GOP leaders to strike a grand bargain with Democrats on deficit reduction that would include tax hikes. Tom Coburn, the anti-Norquist, insists that there’s no signaling here for the simple reason that lifting a subsidy isn’t the same as raising taxes, even if both have the effect of raising revenue. The rebuttal is that Coburn actually did vote for tax hikes when he supported the Bowles/Simpson Deficit Commission plan that ended up failing last winter. Ethanol is the flashpoint, but the wider war is over whether there’s room for compromise on taxes in the name of finally solving America’s debt problem — which explains why the sniping between Team Coburn and Team Norquist has turned remarkably nasty at times. This dispute isn’t going away — on the contrary, it’ll get hotter — so watch Coburn’s floor speech today and then spend five minutes with this excellent backgrounder from Andrew Stiles on the deepening conservative wedge. It’ll serve you well down the road if/when a deficit package finally hits the floor.
Hey Obamski: Sustain that.
If this goes through, does it not take off an an issue for the Iowa caucases???
Thank God. Now the price of corn will come down. Just a matter of time.
Iowans will probably make it so.
Now they need to eliminate the requirement that it be put in gasoline!
It doesn’t remove the mandate to put ethanol in our gasoline. But one step at a time, eh?
And even if this proves to be a show vote that doesn’t actually pass into law, it goes to show that ethanol is increasingly unpopular, so that a huge number of Senators want to be seen voting against it.
Time to sell a futures contract? Will be interesting to see how corn futures about a year out or so will fair tomorrow...
I'm all for free trade,but as long as there is an OPEC Cartel, I'm in favor of a drill baby drill policy coupled with a $50/barrel tariff on imported oil.
Probably more time than we’d like. The House is not expected to take this up, thus it will die, and Obama would probably veto it in any case. It’s either a safe way for some Senators to grandstand or a sign that maybe things are moving in the right direction. Damned if I know which.
Does anyone at FR have an understanding of how the ethanol business would operate (if at all) without subsidies?
I hate ethanol. I firmly believe it somehow damages the engine. Grrrr
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Quite surprised and disappointed at Thune’s “Yea” vote.
It’s bound to. You reduce the supply of liquid fuels by 10%, how could the price not go up?
I don’t see how this does anything but raise the price at the pump.
It does, however, allow more efficient methods of producing ethanol that does not require corn farming lands be used - such as cellulosic ethanol, which is basically produced from a weed-like plant that’s useless for anything else and can basically be grown in otherwise useless swamp.
Other methods could not compete with corn ethanol as long as corn had a subsidy.
I figure the grandstanding.
I don’t understand how it “reduces the supply of liquid fuels”?
Corn ethanol will die, at least as we know it, if this should pass the House.
Other forms of ethanol production will spin up as a result, but there will be some short term pain at the pump as the “let’s burn food” fuel additive is replaced with “let’s burn weeds or other stuff that isn’t food.”
The next step is to eliminate the ethanol mandate entirely.
It can form residues on the back of intake valves, but most of the problems with ethanol are how it gums up and/or destroys the fuelling system.
The corn ethanol providers are already finding that corn ethanol is uneconomical even with the subsidies. Many corn ethanol refineries have closed. This would probably kick a bunch more of these ill-advised adventures over the edge into bankruptcy. This would reduce the amount of ethanol available to blend into gasoline.
There is corn and then there is fuel corn.
Ethanol remains mandated. But, without the subsidy, it will be more expensive.
Ergo, the price of fuel at the pump will go up.
The consumer is gonna pay -- instead of the taxpayer.
He's listed among the Nays.
Yes, it does. Plus, there are all kinds of consequences involved not addressed. First, ethanol is the oxygenate component of gasoline that replaced the banned carcinogen MTBE which reduces air pollution. Also, the absence of the tax credit effectively kills the program just as it is making major progress. The program was designed to stimulate the building of the ethanol plants, now providing 10% of our fuel, which are scheduled to switch over to using cellulose instead of corn for the feedstock. Great progress in cellulosic ethanol has been made and cellulosic ethanol plants are now coming on line. I figure someone does not want our fuel supply coming from corn stover, waste cellulose, and switchgrass, so they are going to kill a program that would have worked just fine.
Please read my subsequent post #20 above.
It says the subsidy is paid to the “fuel blenders”. Is this the same as “corn ethanol refineries”?
The fuel blenders are still required to use the product, so demand should remain the same, less what reductions come from higher prices.
I will supply this excellent description by NVDave...
You are right on the falsehood of ethanol being useful for emissions control in automobiles. If anyone asks me how to get farmers to get ethanol out of our gas tanks I tell them the real culprit here isnt the farmers, it is the EPA and the environmentalists.
The whole sorry episode of how we arrived at ethanol in our tanks is thus:
1. EPA decides that smog is caused (in part) by unburnt fuel in open-cycle or carbureted auto engines. To this end, they decide that adding an oxygenate to the fuel (a substance that has an abundance of oxygen molecules in excess of the carbon and hydrogen molecules that could eat up all the oxygen on their own, leaving the surplus of Os for use in the combustion of gasoline) is desired.
2. The first oxygenate is MTBE, what was effectively a waste by-product the refiners had laying about in oil production.
3. ChemEs and hydrologists tell the EPA to NOT go down this road, as MTBE is highly volatile and VERY mobile in soil. If you have a tank leak of (eg, diesel), the diesel tends to reach an equilibrium in the soil and stay relatively immobile. Pour some MTBE on top of that spill from 30 years ago and *straight* down it goes, into the water table. The ChemEs and hydrologists told the EPA and environmentalists this in the early 90s, to no avail. MTBE starts getting blended into fuels in urban areas, starting in the home of all envirowhacko nonsense, California.
4. Over the years, the predictions of ground water contamination come true - in spades. Google (or otherwise search) for MTBE and ground water. Prepare to be shocked.
5. So the EPA starts casting about for a oxygenate that has less (not no but less) mobility in the soil. American farmers, who at that time were suffering under crushing low commodity prices, step forward and say How about ethanol? We have this HUGE surplus of corn (and in the mid-90s, they were not lying - we had huge carry-outs, crushing low prices, etc) and we can turn this into ethanol pretty cheaply, add this to the gasoline and there you go. Oxygenate.
BTW - ever wonder why methanol and ethanol burn with a pale blue flame, even if all youre doing it lighting up a puddle? You can get oil products to burn with a pale blue flame if you force-feed the fire more air or O2, but you dont need to do anything other than light up a puddle of alcohols and the burn with a blue flame. Why is that? Because the combustion throws off an excess of oxygen for the combustions requirements, thats why. When youre casting about for an oxygenate, start with anything that, in a puddle, burns with a pure blue flame.
5. This works for awhile, first getting rammed down the throats of urban gasoline markets. Yes, ethanol is hygroscopic and therefore will add water to your infrequently used tanks of gasoline (eg, boats, small engines) and yes, it varnishes up faster than pure gasoline. Ill grant people ALL those complaints about ethanol in gasoline. Theyre all true. So are the issues with seals and rubber.
6. Detroit, never failing to exhibit their crass stupidity and ignorance of fundamental engineering, just wants to shove ethanol into cars as tho it is gasoline. Detroit takes no effort to use ethanol as what it could have been - a huge booster of engine efficiency.
Let me bore people for a sec with some engine engineering: One of the limiting factors of gasoline engine efficiency is the low compression ratio. At higher compression ratios, gasoline engines with spark ignition go into pre-detonation (which many people mistakenly call pinging). In the old days, you used to pay mucho dinero for higher octane gasoline to solve this pre-det problem. High octane fuel also, like ethanol in gasoline, has a lower amount of BTUs per gallon - ie, youll get lower MPG in an engine that does not require high-octane gasoline by using it. You get more power per gallon in lower octane fuel.
But in the old days, we used to increase octane by adding TEL - Tetra Ethyl Lead. Us old farts here will remember leaded fuel. In aviation fuel, they used to add toluene and other aromatic hydrocarbons to increase the octane. Those old WWII fighters had terrific effective compression ratios - way the heck up there once you put in the high-boost setting on the blower or closed the gate on the turbo. WWII avgas was up near 130 octane. Even today, avgas is 100 octane low lead fuel - just for Cessna or Piper bug-mashers. Toluene, however, is toxic like benzene, just not as bad as benzene, so the addition of toluene for Mom, Dad and Junior going to the shore or mowing the law is right out.
Enter ethanol, which has a test octane of 129. IF (and thats a huge if) Detroit had their head somewhere other than their nether regions, they could have used the oxygenate mandate of ethanol to boost the efficiency of gasoline engines. Ferrari has done this with one of their fire-breathing engine of about 500HP - on E-85, they get more MPG and more HP with E-85 than normal gasoline. How? Boosting the compression ratio, probably by changing the pistons or cylinder heads. Detroit, however, makes no such attempts.
7. But do we even NEED ethanol in our gasoline any more? No. With closed cycle electronic fuel injection now the overwhelming majority of the US auto fleet, no, we no longer need ethanol or MTBE in our gasoline. At all.
Really, we dont. The only cars that really benefit from additional O2 in the fuel are the open-cycle (eg, throttle body injection) systems or cars with carburetors. OK, so your classic 50s Chevy will smoke a little bit. So what? How often do you pull that beauty out of the garage? Four, five times a year? This is not a frequency, nor is the ownership rate of such old cars, sufficient to justify the policy of adding oxygenate to fuel any more.
8. So now corn *and* oil prices are zooming upwards, thanks in part to China, thanks in part to Ben and his Magic Federal Reserve Helicopter, which looks a little like a CH-47 Chinook, only about the size of the Queen Mary. If you ever look up and see something that you think is a UFO with rotors, scattering little bits of confetti on the wind? Thats Ben. Hell be the little bald guy on the jump ramp on the rear, flinging paper out of a big burlap sack.
Now were in the worst of all possible worlds: We have crappy gasoline which many people hate for the increased maint expense, but which adds nothing other lower mileage than we otherwise would get on modern cars (because Detroit has their head up their buttocks), we have a bizarre economic policy of effectively paying oil companies to do this to us, and farmers no longer need this subsidy, yet they get blamed for it, even tho with the prices in the commodity markets, no one needs the blenderss credit to create an ethanol market.
Oh, and we have supposed free market supporting pols who stump based on this insanity.
For me, someone who has traced out the full map of this insanity, it is maddening. I really dont like farmers getting the bad rap, when it really isnt their money people are talking about with the blending credit per gallon, even tho I am in favor of eliminating ag subsidies (provided we have sound trade policies to go with it, and that does not mean free trade as we now have it). Im resigned to the fact that Detroit is staffed with morons and retards for engineers (and I say that as a retired engineer) and theres nothing we can do about that, either.
What can we do?
Want to eliminate ethanol people? Get rid of the mandate for oxygenate. I think this is possible, when coupled with a push on the issue of food prices. Show that ethanol has little efficacy any more in terms of clean air, while adding somewhat to food prices. Get rid of the oxygenate mandate and the issue goes away as soon as oil prices come down and corn prices are still high. Poof, the ethanol plants will close up or mothball quickly.
My son is a mechanic and he says ethanol ruins small engines like lawnmowers and boats.
Fuel blenders are the distributors at pipeline terminals. Ethanol producers do not receive specific federal subsidy, contrary to the articles of faith on FR.
I knew what you meant about Thune.
As for Maine, they aren’t on the top ethanol producer states list and I doubt Maine produces much corn.
It can be. It’s a gray area - a ethanol refinery can be the point at which the gas and ethanol is blended, or the ethanol could be transshipped to a a fuel depot or even an oil refinery for mixing there.
Either way, this will introduce additional price sensitivity all down the chain from the ethanol refiner - and more importantly, drive costs up for the refiner as well, at a time when they’re just marginal as it is.
Normally I dislike it when a government kills off an industry through regulation, but this is something the government picked as a ‘winner’ over the protests of anyone who wasn’t in the Corn Belt. They deserve some payback.
“I hate ethanol. I firmly believe it somehow damages the engine. Grrrr”
Can E15 Gasoline Really Damage Your Engine?
Is there an additive that will cut the gummy crap that really works?
You made a statement...and I asked you for a source. I can’t see why you would not post a source???
Startron has one, Seafoam has some stuff that works as a cleaner but isn’t great long term, and there’s Sta-bil to keep a tank from going bad over the long term.
None of which, however, keeps the ethanol from eating fuel lines, vacuum petcocks, rubber seals or most of the other parts in small engine and motorcycle fuel systems (bikes did not get widespread fuel injection until very recently.)
Farmers are “subsidized” for growing corn, and gasoline distributors are “subsidized” for using ethanol. Ethanol producers don’t need or get a federal subsidy, but that doesn’t stand in the way of religious belief.
Thanks to all who answered my question.
Don’t know how to direct post to all of you at once.
“6. Detroit, never failing to exhibit their crass stupidity and ignorance of fundamental engineering, just wants to shove ethanol into cars as tho it is gasoline. Detroit takes no effort to use ethanol as what it could have been - a huge booster of engine efficiency.”
They actually did make a number of E85 models and still do.
The problem is that ethanol contains about half the energy per gallon as gasoline (if I recall correctly, it’s been a long day) so even if you ran an engine on E100 (100% ethanol, you will *still* get decreased fuel economy even if you did in theory have the capability to make more power.
You also didn’t mention the nasty problem that while complete combustion of ethanol is ‘clean’ in that it results in only carbon dioxide and water vapor, it does *not* combust completely in any internal combustion engine and instead it produces:
Higher levels of ground-hugging ozone.
Significantly raised emissions of *formaldehyde* and other aldehydes such as acetaldehyde - fun things you *really* don’t want to be breathing.
In addition, the ethanol produced from corn does not lower emissions nearly as much as promised. Even using E85, which is 85% corn ethanol and 15% gasoline will only net a 17% pollution reduction. If you use 100% cellulosic ethanol (made from stuff that is not corn), you get an 85% decrease in pollutants.
‘Bout time someone started wading into all of these supposed “green energy” projects that the Feds have been underwriting to the tune of Billions a year for years.
Some of the States have been bleeding money into supposed “green” projects, and that is finally coming to a screeching halt as well. Oregon’s legislature recently woke the hell up, and passed new legislation that significantly restricts the amounts of money that Contractors were qualifying to receive for installing wind turbines.
Oregon found out that most if not all of the electricity being generated is contracted for the next decade to California.
Bonneville Power Administration is playing merry hell right now because the rivers are all at or just below flood stage with seasonal snow melt just starting after record snowfalls in the mountains, and every time a new, wet, windy storm blows through the Pacifist Northwest, BPA has to shut down the wind turbines because they cannot dump water over the dams any faster, and the turbines instantly overload the transmission lines.
In approving wind and other “alternate” energy projects, they cannot by law be compared to hydroelectric projects because the cost difference is so vast that none of the “green” projects would be any where near cost efficient.
Most of the wind turbines are being imported lock, stock and barrel from overseas, and the only jobs created are for the truck drivers who deliver the turbine assemblies, and the crews who install them. Once operating they require little maintenance and few long term jobs.
This has been a vast, dark joke, and we are only beginning to see the cost of our own folly for allowing this all to go through.
More consequences for losing an election.
I can’t take credit for it, it was explained by NVDave. All in all, I thought it was a pretty understandable explanation.
I'm a huge fan of South Dakota and Thune. I have family ties there. If you look at the Nays it's bi-partisan. The states like mine (Illinois) and states like South Dakota have corn, lots of corn.
In college I learned in Poly Sci 100 that politicians pander to their states. Hence earmarks.
If you mapped out the Yay's and Nay's it would be Yay's (no corn), Nay's (lots and lots of corn).
Good! That will put the House on the spot. ;-)
Good, now cut the Hollywood film subsidies and tax shelters. They keep harping about raising taxes on the rich, then they should have no problem if DC eliminates their tax shelters.