Posted on 06/09/2011 9:26:42 PM PDT by quantim
DES MOINES, Iowa (AP) -- Gone are the days when ethanol topped the list of policy priorities in Iowa, the corn-rich state that hosts the leadoff presidential caucuses.
But apparently some of the 2012 Republican presidential field isn't giving up on the issue, magnifying the relevance of ethanol subsidies to suit their campaigns.
Former Minnesota Gov. Tim Pawlenty calls ending the subsidy a hard truth, while former Utah Gov. Jon Huntsman says his opposition to the subsidy is why he won't bother to campaign there.
But powerful Iowa Republicans also want to phase out the federal tax credit for ethanol, saying the now-thriving industry no longer needs it and the federal budget deficit demands it be ended. The 45-cents-a-gallon tax credit cost the federal government $5.4 billion in 2010.
(Excerpt) Read more at hosted.ap.org ...
Gubmint subsidies create no jobs and the minions are finally catching on.
Econ 101....When a govt wants more of something for the good of society it subsidies it......
...Govt subsidies for cheap Food has kept the USA consumer food costs 15% plus under world costs for decades........
do the math: 15% X 30,000 Ave income X 300 million people........1.35 Trillion.......at a cost of 25 billion in subsides to farmers......consider it welfare for the American consumer......it just happens to pass thru the farmers fingers for a short time.
Ethanol maybe adds 5 cents to a box of cornflakes....yets saves 50 cents a gallon at the pump......
Wrong.
The 45-cents-a-gallon tax credit cost the federal government taxpayers $5.4 billion in 2010.
McCain led the way on this issue. Yes, I know...still a RINO but nobody else had the guts to oppose ethanol subsidies except for Fred Thompson (who was only in the race to support his good old friend).
Good, do away with the damned mix mandate too.
Some ethanol facts:
Iowa’s ethanol industry can produce more than 3.6 billion gallons annually, using over 1.1 billion bushels of corn.
One bushel of corn can produce 2.8 gallons of ethanol. And 1/3 of a bushel of corn used to produce ethanol goes back to livestock feed in the form of DDGs.
Iowa leads the nation in ethanol production, creating nearly 30% of all ethanol.
One out of every 10 Iowa vehicles are able to fill up with higher blends of ethanol, including E85 which means 60 cents of every dollar spent filling up remains in Iowa.
A 2008 Merrill Lynch study found that ethanol prevented gasoline prices from rising as much as 15%.
While the U.S. imports 65% of its petroleum needs, domestic ethanol now reduces oil imports by 128,000 barrels each day.
Each barrel of domestic ethanol displaces 1.2 barrels of imported petroleum.
Producing ethanol requires less water than gasoline - by a 3-to-1 margin.
The ethanol industry has resulted in 50,000 new jobs in Iowa and accounts for $13 billion of Iowa GDP.
Ethanol contains 67 % more energy than it takes to produce it.
Stop the subsidy. Let the free market determine the sustainable level of ethanol production, no Washington bureaucrats. Currently about 1.1 billion bushels of Iowa’s 2.5 billion bushel corn crop is being used to make ethanol. Let the market decide.
Who spends $30,000 per year on food? You need to revisit that math.
Romney’s toast.
Obummer spends 30k a month on food
Michelle Obama released her “myplate” food guidelines. They included 7 days worth of sample menus. I calculated what it would cost for one person to make the meals on two of those days. For one day it was $45 the other $50. One person at $16,000 per year on food on the Obama meal plan.
Is it any wonder Iowa was the slowest growing state in the 20th century, economically and population-wise?
As long as ag is omnipotent in Ioway, this state will wallow in mediocrity.
Better try Reading Comprehension 101, Auto Maintenance 101, Math 101, and “How Not To Be Bamboozled 101”, first.
Food cost as a % of income is WELL under 15% for the average U.S. family. Even a family of four with a family income of $30,000/yr can do better than that. But, let’s say they are not so smart, and they do spend 15% of the family income for the family’s food, or $1125 per family member, per year. Now, if U.S. food costs are 15% under world costs*, then $1125 x 0.15 = $168.75 per person. $168.75 times 300E6 = $50.6 billion. Still seems like a good deal, right?
However, US food costs are not low just because of subsidies. We have an exceptionally efficient farming and food distribution system, among a host of other factors. Almost certainly the subsidies are not the most important factor, but, even if they are 1/2 of the reason food prices in the U.S. are low, now you are down to roughly $25 billion in lower food costs... Hmmm....
I also question the “15% lower than world food costs” figure? How is THAT arrived at? Most of the world’s population is in the 3rd world. In such areas, food costs for basic staples “at the store” or “at the local market” or “at the dinner table” - however you want to look at it, in an absolute sense, are lower, often much lower, than here in the U.S. I have direct experience with this, overseas, and I’ll bet a lot of other FReepers have, too.
Well, never mind that. There are substantial costs associated with ethanol, too. For one, most cars are not engineered to properly take advantage of it, so there is a mileage penalty. (This has improved somewhat, but without more drastic changes to engine design, it looks unlikely to improve much more. Besides, we are talking about current analysis, not future hopes.)
Worse, ethanol causes higher auto maintenance costs. Some of this has been addressed, but not all. And a LOT of cars that weren’t really made to handle ethanol are still on the road. Any decent mechanic can tell you about the increased problems. Just the worsened problems with varnish in the fuel system are a major hassle. Pro-ethanol sites say this is not a problem, but that is NOT my experience. I do some of my own auto work - one preventive measure that I do especially on my wife’s minivan is to remove and clean or replace BOTH fuel filters every year, or every 10,000 miles if that’s sooner, or before any significant trip. Every time I pull out that in-tank filter, for the last several years, I see at least SOME evidence of gummy accumulation on it. We use only major brand name gasolines, too. Before ethanol, this was rarely a problem in any of our vehicles. Now I don’t know what your mechanic charges, but I have a buddy up near Chicago who is top notch competent, so I go over 300 miles each way and pay him his shop rate of $94 per hour to have him work on my vehicles when I can’t do it myself. Your costs may be lower, but I find that paying a top notch mechanic is well worth it, in the long run. Bottom line: For an average family of 4, with 2 vehicles, the increased maintenance on those babies is likely going to eat into any money saved on fuel, pretty quickly. Of course you could buy a newer car with less maintenance problems - I’m sure the lower maintenance costs will help finance the car payments...
Worst of all, your analysis doesn’t address what else the money spent on ethanol subsidies could have been used for. How about using it to reduce the National Debt, the interest on which is going to “kill” us, economically, one of these days? How about using it as an incentive to vastly expand development of domestic oil sources? What would that do for the price of fuel? (Oops, I forgot, current Gov’t policy is just the opposite.) If you really want to go green, why not get rid of the ethanol subsidies and burn the ethanol on site to produce electricity during times of peak demand? Or use the subsidy money instead to fund the programs that help people acquire energy efficient appliances or improve energy savings in their homes. That’s something with REAL payback, long term.
Last, corn is not the inexpensive item it was a few years ago. There is a growing shortage of food, worldwide. China’s consumption in particular is skyrocketing. That 5 cents on a box of Cornflakes is no longer 5 cents. And perhaps more to the point, even a cost increase of 5 cents on a box of cereal, while not very significant here, means that somewhere, like some of the places I’ve been, more children are starving to death.
I will admit, there was a time when I supported ethanol subsidies. One learns as you go along...
Yepper - I'm curious to see how the real market (not the manufacturer who gets a subsidy) could choose a more expensive, less efficient form of energy.
Coupe of other things to factor.
1) Goobermint is shorting itself tax revenues by using subsidies to artificially hold food prices down.
2) What would the price of food really be if there were no government meddling at all? Thinking of all the fertile ground that grows weeds because the feds pay farmers to idle it, or limit dairy production, etc.
Let me guess: lots of arugula from Whole Foods?
Read my post.....it was not edited
30,000 ann. income X 15% under world level of disposable income spent on food X 300 million people..........
math is easy, reading is hard for some.........
My point stands.......the masses want their welfare level food clothing and energy........
Be my guest-——request you energy supplies to be from whatever foreign source / friend or enemy.....and then suffer the consequenses......
Sorry to not reply sooner - have been working way too many hours to hang around here much.
You are multiplying the wrong figures. You can’t find the number of apple seeds in the USA by multiplying the number of seeds per apple times the number of peaches. There are NOT 300+ million annual incomes of an average $30,000, in the USA. To be strictly correct, you’d have to multiply average household income by the number of households in the US.
And for the reasons I stated, I seriously doubt that 15% figure, also. A lot of the world pays more for it’s food than we do, but a lot more pays MUCH less, in absolute terms. Been there, done that.
Where we agree is on the need to be energy self-sufficient, or at least not import vastly more $$ in energy than we export (whatever goods or services) to the same people. Corn-based ethanol aside, we certainly could be self-sufficient, as the resources & technology are there.
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