Wednesday, December 1, 2010

Gore Recants on Ethanol, Congress Dithers

Gore Recants on Ethanol, Congress Dithers

Submitted by Doug L. Hoffman on Wed, 12/01/2010 - 11:05

Al Gore, the high prophet of ecological doom, has stunned the climate change faithful by recanting his support for ethanol fuel. Now he tells us that supporting corn based subsidies was a mistake and that it had more to do with his desire to cultivate farm votes in the 2000 presidential election than with what was good for the environment. This announcement comes at a time when the US Congress has an opportunity to set things right. The current $0.45 per gallon tax credit for adding ethanol to gasoline automatically expires December 31, and all senators and congressmen need to do is nothing. Continue to dither and taxpayers will save six billion dollars plus the air will be cleaner. Unfortunately, the corn ethanol lobby has its hooks well planted in the US Congress, including many Republicans who supposedly have seen the light of spending reduction. Will Congress betray the people yet again?

Like most politicians in the late 1990s, Gore supported huge subsidies for ethanol made from corn—a decision that was later blamed for higher food prices world wide. Total U.S. ethanol subsidies reached $7.7 billion last year, according to the International Energy Industry. The U.S. ethanol industry will consume about 41 percent of the U.S. corn crop this year, or 15 percent of the global corn crop, according to Goldman Sachs analysts. In a rare moment of humility, Gore now admits that he was wrong to push for the subsidies and that he had ulterior motives for doing so.

“It is not a good policy to have these massive subsidies for first-generation ethanol,” Gore said at a green energy conference in Athens, Greece, according to Reuters. First generation refers to the most basic, energy-intensive process of converting corn to ethanol for use as a motor vehicle fuel additive. The total amount of energy produced after the conversion process “are at best very small,” he added. This is in line with previous reports that it is better to burn the feedstock than turn it into ethanol.

Big oil, agri-business and corn farmers shouldn't mix.

According to one report by Paul Driessen, US taxpayers could save $6 billion if the lame duck congress does the one thing that they are good on—nothing. The growing of corn for brewing ethanol fuel is one of the most scandalous businesses in the long history of Congressional pork projects. The home grown industry is supported by generous subsidies, use guarantied by government mandated gasoline blending, and the scam protected by a $0.54 per gallon tariff on imports. Here is what Driessen reported:

Federal laws already require that gasoline be 10% ethanol, and EPA has announced that it will soon decide whether to allow up to 15% ethanol blends for cars and trucks built since 2007. These mandates already require that ethanol use increase from 13 billion gallons today to 36 billion by 2022, ensuring profitable markets for corn growers and ethanol producers, without subsidies. Even large corn ethanol producers like Green Plains Energy now say the subsidies are no longer needed.

The subsidies and tariffs only fatten profit margins, reduce competition, increase consumer prices, cause frayed relations with Brazil over barriers to its sugar-cane ethanol entering US markets, and stifle technological innovation that could improve production efficiencies and lessen environmental impacts.

But that is not all. “The tax credit won’t boost ethanol consumption at all in the future, because the mandate will set demand,” Examiner columnist Timothy Carney observes, “so the tax credit will simply subsidize the ethanol that blenders – ie, oil companies – would have bought anyway.”

The corn ethanol lobby says ending the subsidies would cost up to 160,000 jobs. However, a recent study by leading agricultural economists at Iowa State University concludes that only 300 jobs would be lost. Using these figures means that saving jobs by preserving the subsidies works out to $20 million for each job saved. This is even more ineffective than the “green jobs” promoted by the Obama administration.

Opposition to extending the tax credit and tariffs is building. A growing coalition of meat and food producers, environmental groups and consumer organizations are banding together to fight this faux-green government folly. Opponents point out what has been known for sometime: that cooking corn to power cars increases corn prices, reduces farmland available for other crops, and drives up the price of beef, pork, poultry, eggs, corn syrup and all groceries made with those products. Rising food and feed prices reverberate in developing nations where it means more malnourished people and even food riots. Even Gore admits that “the competition with food prices is real.”

He's still a climate change snake-oil salesman.

Does this mean that Gore has given up on alternative fuels? Not on your life. The clown prince of climate change added this at the end of his interview: “I do think second and third generation that don't compete with food prices will play an increasing role, certainly with aviation fuels.” These so called cellulosic biofuels are just the next act in a multi-stage ripoff.

This proves once again that politicians' reasoning skills are woefully deficient and that they constantly invite retribution from the law of unintended consequences. Whether the alcohol comes from corn or some other crop, such activity cannot help but compete with food production. That competition will drive food prices higher, expanded land use will increase runoff containing pesticides and excess fertilizer, and the water use requirements will be unsustainable. Even when Gore is right he gets it wrong.

If you are a US citizen I urge you to contact your representative and senators. Tell them that ethanol subsidies are part of the pork you sent them to Congress to fight. Tell them, that if the EPA raises the ethanol blend mandate to 15%, to defund the entire agency. Tell them that the sentiments expressed by the TEA Party are not going away and that there will be another national election in 2012. The US government's ethanol scheme is one of the most blatant and egregious examples of special interest pandering ever seen. It is Congress' choice—continue paying off lobbyists or get reelected.

Be safe, enjoy the interglacial and stay skeptical.

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