Agriculture

Confessions of a Gasoline Call Girl

by Brian McGraw on November 10, 2010 · 3 comments

in Energy, Ethanol

Marc J. Rauch, Executive Vice President/Co-Publisher of The Auto Channel, posted a lengthy diatribe on the American Petroleum Institute’s recent lawsuit on the EPA’s approval of E15 blends in newer vehicles. Read it here, and note the title: “Gasoline Whores File Frivolous Lawsuit in Attempt to Derail American Energy Independence.” He is mad.

The lawsuit itself is not all that interesting. What is interesting, I think, is how willfully blind the author is to a number of realities that put the successes of the ethanol industry into perspective. He addresses a number of organizations that provided public comments on the EPA decision:

Grocery Manufacturers Association Vice President for Federal Affairs Scott Faber said: “We were disappointed in the Administration’s decision to allow more ethanol in gasoline before truly sustainable advanced biofuels are commercially available.

…

The Auto Channel’s response: Truly sustainable advanced biofuels? Humans have been making alcohol for thousands of years from nearly any plant they could find, what’s more sustainable than that. Advanced biofuels? That’s okay, too, once they’re ready, but why wait for cheaper fuel prices, oil independence and a cleaner environment when we have perfectly good truly sustainable biofuels right now – of which ethanol is only one alternative. By the way Mr. Faber, I challenge you to name what projected biofuels you’re referring to. I think you don’t know. I think you are reading/writing off a prepared script.

TAC is correct when he says that humans have been making biofuels for hundreds of years. Cellulosic ethanol was first developed in 1898. But the ability to create biofuels in a laboratory is different than being able to produce them in an economically and commercially viable manner. Despite 30 years of federal subsidies, corn ethanol has been unable to compete in a serious way with petroleum. The same is true (and even more true) of cellulosic ethanol. There just isn’t a whole lot of energy in plants, and it requires a lot of energy to extract them and make them usable. It’s possible that some technological breakthrough will change this, but it is by no means guaranteed. Congress can’t mandate a cure for cancer, yet when it comes to biofuels they seem to believe they can bend reality.

National Council of Chain Restaurants Vice President Scott Vinson said:“This challenge to the EPA’s decision is necessary to reduce the strain that ethanol production from corn has placed on U.S. agriculture. The EPA’s decision will lead to an ever higher proportion of the nation’s corn crop being diverted to fuel use, raising prices for participants in the food chain and consumers. Already supported by market-distorting mandates, tax credits and import tariffs, ethanol demand for corn has been singled out as the preferred use for U.S agricultural production long enough. Corn is an extremely important commodity used in feeding the world, and it’s about time we reverse the trend of burning more and more of it as fuel.”

TACH’s reply: Mr. Vinson, what script are you reading from? Why don’t you question the government subsidies and allotments that the oil/gasoline industry has been receiving for more than 100 years? Why don’t you question the billions of dollars of our money that is spent to protect enemy regimes and their oil? Oh, by the way, the world isn’t fed by eating corn; wheat is your huckleberry. Wake up and smell the grease, buddy.

Do the oil and gas industries receive subsidies? This is a “yes, but” moment. They receive certain tax breaks – an example is the oil depletion allowance that allow them to pay less tax (relative to other industries) based off of the way in which capital investment is deducted from the net amount of income they generate. This seems to infuriate the average American. But what few realize is that as a percentage of profits, the oil industry still pays significantly more tax than other industries in the United States. As the Tax Foundation explains:
In addition to income taxes, the table below shows that Exxon paid or remitted $20 billion in various sales taxes, excise taxes, severance taxes, and property taxes. This brings the total amount of taxes the company paid or remitted to $29.3 billion, nearly three times the net profits it earned for shareholders.

The oil industry certainly pays its “fair” share of taxes, where fair is defined as a much larger percentage of income than other industries.

National Turkey Federation President Joel Brandenberger said: “In trying so hard to rush out an E15 rule before Election Day, EPA completely disregarded the legitimate scientific concerns surrounding E15 and the potentially disastrous impact of diverting even more corn from food and feed to fuel. We believe the agency ignored the law as well, and we are confident the court will agree.”

TACH’s response: There are no legitimate scientific concerns regarding the use of ethanol. Ethanol is a proven engine fuel used around the world. It has been so used since the earliest automobiles in the mid 1800′s. Until lies such as the ones that you spout about ethanol were created by gasoline interests, ethanol was the preferred fuel of choice by people in the know. Contemporary studies and research continually prove that ethanol hasn’t suddenly become bad: It’s as good and safe as it always was.

Ah yes, it was those evil conniving gasoline interests of the 19th century that ruined ethanol’s chance at becoming the preferred fuel of the “people in the know.” I’m going to assume “people in the know” were people who liked walking everywhere. I’m sure the fact that petroleum was incredibly easy to produce in mass quantities compared to ethanol didn’t have anything to do with petroleum’s adoption. The bolded sentence above alone pretty much shows you how detached from reality Rauch is.

Snack Food Association President and CEO Jim McCarthy said: “In addition to failing to follow the spirit of the Clean Air Act, the EPA has made a decision that will adversely impact our food supply and ultimately cost American consumers greatly.”

TACH’s response: Hey, we love a candy bar and potato chips as much as the next person. But now some guy who represents an industry that might just be the biggest demon in the world is telling us about the environment and product costs! If there’s only 6 cents worth of corn in a $4.00 box of corn flakes, I shudder to think of how much we are getting ripped off on a $4.00 bag of tortilla chips.

But, the number one reason why the lawsuit and entire opposition to e15 is so off base: We don’t need corn to make ethanol, there are plenty of other agricultural products and by-products that can be used, and many of them do not require chemical fertilization or the use of “valuable” farm land. The whole issue of corn’s use for ethanol is irrelevant.

There really aren’t very many products available right now that are (1) scalable and (2) can compete with gasoline at its current prices. Corn ethanol is kind of close, but there are still problems with market penetration – automobile manufacturers aren’t going to produce E85 vehicles unless there is significant long term (non government mandated) demand for it, and with oil prices where they are now there isn’t significant demand for it.

Furthermore, imagine the amount of farmland required to produce 210 billion gallons of ethanol (about 17 times what was produced in 2009), which is the equivalent of the ~140 billion gallons of gasoline the U.S. uses each year. This would have significant negative effects on agricultural markets

You can wave all of these problems away if you don’t care about people taking you seriously, but to produce 210 billion gallons of ethanol from anything will require a lot of “valuable” farmland. Note also how he puts “valuable” in quotations as if the idea that farmland has value (and that value is taken away from it when it’s being put towards less productive use) is some sort of conspiracy concocted by gasoline-interest to keep ethanol down.

Finally, he ends with a good\evil list, where rent-seekers are all placed into the “hero” category and the “evil villain” category ranges from API to Hugo Chavez. He placed himself in the hero category — is Marc Rauch a serious person?

The evil villains:
American Petroleum Institute
National Petrochemical & Refiners Association
OPEC
All gasoline companies
EnergyTribune.com
FollowtheScience.com
Prism Public Affairs
Jerry Taylor and the CATO Institute
David Fridley
The aforementioned coalition members
Hugo Chavez
Mahmoud Ahmadinejad

The heroes
David Blume & Tom Harvey
Ted Chipner & Ohio Biosystems
American Coalition for Ethanol
Growth Energy
Ethanol Today Magazine
Renewable Fuel Association
Anne Korin & the Institute for the Analysis of Global Security
Dave & Steve Vander Griend & ICM, Inc.
POET
Tom Waterman and Ethanol Monitor Magazine
Edwin Black
My business partner Bob Gordon, me and everyone at The Auto Channel

Washington’s New War on the West

by Ben Lieberman on October 4, 2010 · 1 comment

in Global Warming, Odds & Ends

The economic track record of the current administration and Congress is not a good one. Unemployment remains stubbornly high at nearly 10 percent, and many believe federal missteps prolonged the recession and are weakening the recovery. While things like ill-advised spending, Obamacare, and looming tax hikes are doing damage nationwide, a number of other federal measures have particularly burdened the American West, the region suffering with the highest unemployment rate in the country. The Senate and House Western Caucuses’ recent study, “The War on Western Jobs,” documents the host of environmental policies that have targeted the sectors crucial to the economies of Western states — especially energy production but also mining, logging, farming, and ranching.

It is important to note that the federal government controls the economic fate of western states to a greater extent than any other part of the country. The lands comprising 12 western states (Montana, Wyoming, Colorado, New Mexico, Arizona, Utah, Nevada, Idaho, Washington, Oregon, California, and Alaska) are nearly half owned by the federal government. More so than other regions, job losses in the West can be traced to federal policies.

The Obama administration’s attack on Western energy jobs began within weeks of taking power when the Department of the Interior revoked 77 oil and gas leases in Utah and halted new oil shale projects in Colorado. By the end of 2009, the administration had issued fewer onshore energy leases than in any year under Bush or Clinton, and the pace thus far in 2010 is no better. Throughout the West, vast energy-containing federal lands are currently off-limits, and the administration and Congress have sought to restrict access to millions of additional acres. Even where energy leasing is not explicitly prohibited, Obama’s regulators have imposed red tape and bureaucratic delays that have substantially limited it.

Beyond oil and gas, the administration has all but declared war on coal mining, which is particularly vital to Wyoming and Montana. The Environmental Protection Agency’s global warming regulations as well as many other anti-coal measures (including Boiler MACT, combustion byproducts, new National Ambient Air Quality Standards, others) bode ill for the future of western coal.

The threat of new energy taxes has only added to the chilling effect on Western investment in energy projects.

In addition to the impact on energy production, the federal government’s excessive ownership of land — as well as intrusive measures like the Endangered Species Act that target private property — is posing growing problems for other industries. Despite the West’s mineral wealth, mining jobs continue to decline. The same is true of logging. Farmers and ranchers also face a host of costly hurdles.

Instead of providing regulatory relief that could turn the region’s economy around, Congress has proposed new constraints like the sweeping Clean Water Restoration Act. This bill would essentially federalize land-use decisions on any property containing wetlands, and compounds the threat by defining wetlands so expansively so as to include almost everywhere. And the Obama Department of the Interior and Department of Agriculture’s Forest Service have issued new agency guidance for federal lands, which under the name of addressing global warming would further restrict access.

Granted, Washington’s control over western lands and the misuse of that control to curtail economic activity is not a new phenomenon, but the current administration and Congress have taken it to a new level.

The West’s economic pain has not been justified by environmental gain. Quite the contrary, Uncle Sam turns out to be a lousy landlord. For example, the forest fires that have become common in Western lands in recent years have mostly originated on federal lands, and not on privately-held forests which tend to be better managed against such risks. A less-intrusive federal approach could deliver both economic and environmental benefits.

The next Congress should have a long list of reforms on its agenda. The Western Caucuses’ report spells out what needs to be addressed to get the American West back on the path to prosperity.

Antibiotics and Meat DO Mix

by Greg Conko on September 1, 2010 · 1 comment

in Agriculture, Culture, Environment, Health and Illness, Precaution & Risk, Regulation, Zeitgeist

CEI submitted comments this week on an FDA proposed guidance that “encourages” farmers and antibiotics manufacturers to stop using “medically important” antibiotics for livestock growth promotion purposes.  When I first started researching the topic, I was sympathetic to the view that at least some of the antibiotics that serve as essential human therapies probably shouldn’t be used in livestock.  Sure, I thought, cheaper meat is a huge consumer benefit, but why surrender our last line of defense in the war against germs?  I wasn’t as strident as this Los Angeles Times editorial (“Antibiotics and meat don’t mix”), but I did think that maybe a few limits couldn’t hurt.

Naturally, I was surprised to find out how much it really could hurt.  There’s actually a pretty large body of scientific research showing how much so-called sub-therapeutic doses actually contribute to consumer health by reducing pathogen loads in animal-derived foods and have a positive impact on human safety (see here, here, here, and here, for just a few examples).  Plus, when the European Union banned antibiotics for livestock growth promotion, the expected decrease in the incidence of resistant human pathogens did not occur.  In most cases, the number of resistant bacteria continued rising, and in some cases they rose dramatically.  Moreover, the incidence of foodborne illness also rose substantially.  This shouldn’t have come as much of a surprise, since it’s estimated that livestock uses account for as little as 10 percent of the problem with antibiotic resistant bacteria.

The effect of antibiotic resistance on human health is a complex problem that cannot be solved by superficially appealing solutions.  What we need to do is optimize the mix of long-term efficacy and near-term benefits from antibiotics use.  We ordinarily expect that market forces can do this kind of thing, and that government regulation would exacerbate problems.  The appropriate market forces are attenuated here, however, since the off-patent status of most antibiotics makes them a “commons”, with little incentive for anyone to maximize the net present value.  Add in cross-resistance issues (i.e. resistance to one antibiotic can, at times, make a pathogen resistant to another one in the same or similar chemical class), and the end result is that we have to become more creative about instituting the right incentive mechanisms.  But one thing is certain:  an FDA decision to cut off a whole category of uses because the agency is solely concerned with long-term efficacy is shortsighted at best.

Here at CEI, we have long observed that far too many governmental (and some private) efforts to limit exposure to certain risks unintentionally increases exposure to other, potentially more hazardous risks.  Whether you’re talking about human or animal use, banning beneficial uses today can have negative impacts on human and animal health just as surely as a lack of long-term drug efficacy can.  And it seems pretty clear that use of antibiotics for livestock growth promotion purposes can coexist with the optimal antibiotics use.

Government-Sanctioned Lying and Reparations Increase National Debt: The Pigford Class Action

by Hans Bader on August 12, 2010

in Agriculture, Bailout Watch, Economy, Employment, Energy, Environment, International, Legal, Natural Resources, Odds & Ends, Personal Liberty, Politics as Usual, Regulation, Sanctimony, Stimulus to Nowhere, Trade, Zeitgeist

There are only 36,697 black farmers in the entire country, but in a class-action lawsuit, more than 86,000 African-Americans claimed to have suffered from race discrimination by the Department of Agriculture during their time as farmers.   They are getting “‘virtually automatic’ $50,000 payouts” at taxpayer expense, thanks to the Obama administration.  It has repeatedly loosened the requirements for payouts in a class-action lawsuit against the government known as the Pigford case, in order to make such payouts possible.  Essentially, the Obama administration is using the case to award race-based reparations to people who never farmed or even intended to farm.  The government’s collusion with the plaintiffs’ lawyers in this case will ultimately cost taxpayers billions.

The next time you hear President Obama on TV challenging his critics to identify any unnecessary government spending that can be cut, and suggesting that there is no waste to be found in the federal budget, keep this case in mind.  In 2009, Obama made a big show of ordering his cabinet to come up with a measly $100 million in cuts even as he submitted a record budget request of $3.67 trillion (not counting hundreds of billions in “emergency” spending).  That $100 million was less than 0.003 percent of the budget, and is much smaller than the billions that the government will ultimately waste on the Pigford case.

The Congressional Budget Office has estimated that “President Obama’s policies would add more than $9.7 trillion to the national debt over the next decade.”  That’s despite the fact that there are $3 trillion in tax increases built into the president’s budget.

Obama recently signed a deficit-expanding $26 billion public-employee bailout.  The stimulus package is now expected to cost $75 billion more than predicted.  The stimulus package is using taxpayer subsidies to replace U.S. jobs with foreign green jobs. It also destroyed jobs in America’s export sector.

One issue in the Pigford case was the fact that people with bad credit ratings didn’t get loans from the Agriculture Department as often as people with good credit ratings.  That was deemed “discrimination” because African-Americans tended to have lower credit ratings on average than whites.

How to Fix Immigration’s Black Market

by Ryan Young on March 31, 2010

in Features, International, Legal, Personal Liberty, Regulation, Zeitgeist

Alex Nowrasteh and I have a piece in today’s Detroit News arguing that liberalization, not regulation, is the way to shrink immigration’s massive black market. Our main points:

-New rules that came into effect this month, such as raising the minimum wage for H-2A visa holders (that’s the visa for low-skilled agricultural workers) makes cheaper undocumented workers look more attractive for employers. They actually harm legal workers.

-Other new regulations, including background checks, workplace inspections, and mountains of paperwork, cost thousands of dollars per employee. These regulations also make black market workers look more attractive.

-The way to reduce illegal immigration is liberalization. For agricultural workers, that means making their H-2A visas inexpensive, easy to obtain, and keeping the bureaucracy to a minimum.

-When legal channels cost too much in time and money, people will turn to illegal channels every time. That’s how the world works. Getting rid of immigration’s black market begins with admitting that fact.

Regulation of the Day 76: Generic Medication for Farm Animals

by Ryan Young on November 30, 2009

in Agriculture, Deregulate to Stimulate, Economy, Health and Illness, Nanny State, Personal Liberty, Regulation, Regulation of the Day

If you put chlortetracycline powder in your farm animals’ drinking water to prevent disease, please be aware that a new federal rule now allows you to buy a generic version of the powder if you wish.

Actually, I probably shouldn’t be calling that rule a “rule.” As the new rule states:

This rule does not meet the definition of ‘‘rule’’ in 5 U.S.C. 804(3)(A) because it is a rule of ‘‘particular applicability.’’

Despite the rule being called a rule twice in one sentence, it really isn’t a rule. Probably best to let logicians sort that one out.

Regulation of the Day 65: Weighing Animals

by Ryan Young on October 23, 2009

in Agriculture, Deregulate to Stimulate, Economy, Nanny State, Regulation, Regulation of the Day

If you sell poultry or livestock, it’s a good idea to weigh them first. Makes it easier for buyer and seller to agree on a fair price.

For some reason, seven sections of the Code of Federal Regulations (see here, here, here, here, here, here, and here) deal with the use and maintenance of the scales used to weigh the animals, the people operating them, proper procedure, and finally, weighing the animals again.

Is this really a federal matter? If so, what isn’t?

Science and the Sustainable Intensification of Agriculture

by Greg Conko on October 21, 2009

in Agriculture, Environment, Nano & Biotech, Natural Resources, Precaution & Risk

The UK Royal Society’s long-awaited study on improving agricultural productivity and increasing food security was released this morning.  Although I’ve only had a chance to skim the report, it seems to have lived up to its promise of eschewing politically correct pop-environmentalism and instead embracing the use of science and technology for producing more food on less land.  The report acknowledges that farming is an inherently un-natural and ecologically disruptive endeavor.  But, it suggests that a healthy concern for protecting the environment necessitates the greater adoption of sophisticated agricultural technologies, including fertilizers, pesticides, and bioengineered (or GM) crops.  Why?  Because protecting the environment will require growing vastly more food without bringing new land into agriculture–what the report calls “sustainable intensification.”

“Past debates about the use of new technologies for agriculture have tended to adopt an either/or approach, emphasising the merits of particular agricultural systems or technological approaches and the downsides of others. This has been seen most obviously with respect to genetically modifi ed (GM) crops, the use of pesticides and the arguments for and against organic modes of production. These debates have failed to acknowledge that there is no technological panacea for the global challenge of sustainable and secure global food production. There will always be trade-offs and local complexities. This report considers both new crop varieties and appropriate agroecological crop and soil management practices and adopts an inclusive approach.”

Read the whole report here.

New Frontier? Hardly

by Ivan Osorio on September 21, 2009 · 1 comment

in Agriculture, Culture

Today in the Washington Examiner, James Jay Carafano of The Heritage Foundation makes a strange case for what he describes as the opening of a new American frontier — where it was once closed. The column is highly unconvincing for two main reasons.

First, and most importantly, Carafano seems to imply that there is some direct correlation between food production levels and the number of people working in agriculture:

A report prepared for the G8 in April concluded that global food production would need to double by 2050 to keep the world fed. U.S. agriculture will have to be an important part of that increase. Likewise, strong, vibrant rural communities are needed to build sustainable agriculture and protect water, wildlife and other natural resources.

America’s vanishing middle should be of concern to all Americans. Though agricultural workers comprise only about 2 percent of the work force and account for less than 1 percent of GDP, they are at the start of a vast and vital assembly line. American farms are part of a complex industry that processes and distributes food, energy (biofuels) and other products — by some estimates about 20 percent of the economy.

This is a non-sequitur in regard to agricultural production. Fewer people work on farms today because increases in productivity allow fewer workers to produce more. As the Department of Agriculture’s Economic Research Service notes:

American agriculture and rural life underwent a tremendous transformation in the 20th century. Early 20th century agriculture was labor intensive, and it took place on a large number of small, diversified farms in rural areas where more than half of the U.S. population lived. These farms employed close to half of the U.S. workforce, along with 22 million work animals, and produced an average of five different commodities. The agricultural sector of the 21st century, on the other hand, is concentrated on a small number of large, specialized farms in rural areas where less than a fourth of the U.S. population lives. These highly productive and mechanized farms employ a tiny share of U.S. workers and use 5 million tractors in place of the horses and mules of earlier days.

Second, Carafano’s definition of “frontier” seems to rely entirely on population density:

Today, hundreds of counties in the Plains states house fewer than six people per square mile. By 19th-century standards, that was frontier territory.

But Frederick Jackson Turner, whose famous 1893 essay, “The Significance of the Frontier in American History,” Carafano cites at the beginning of his column, didn’t settle on population density alone as a definition:

What is the frontier? It is not the European frontier — a fortified boundary line running through dense populations. The most significant thing about it is that it lies at the hither edge of free land. In the census reports it is treated as the margin of that settlement which has a density of two or more to the square mile. The term is an elastic one, and for our purposes does not need sharp definition. We shall consider the whole frontier belt, including the Indian country and the outer margin of the “settled area” of the census reports.

Much of that “free land” was available in previously unsettled areas, where legal and political institutions were weak, when they were present at all. I would propose such a lack of strong central authority as part of  any sensible definition of “frontier” — a criterion that no part of the U.S. meets today.

Regulation of the Day 47: Irish Potatoes

by Ryan Young on September 8, 2009

in Agriculture, Deregulate to Stimulate, Economy, Nanny State, Personal Liberty, Regulation, Regulation of the Day, Trade

Until last Friday, it was illegal for certain producers to sell or import U.S. No. 1 grade “Creamer size” (long and skinny) Irish potatoes. Creamer size potatoes are identical in taste, texture, and weight to their stouter, rounder counterparts.

In the Idaho-Eastern Oregon growing region, this led to over $7 million worth of potatoes to go unsold. That’s a lot of uneaten meals. Hopefully the USDA will repeal similar aesthetic restrictions on other types of food. It is bad policy to keep perfectly good food off the market because of its shape, especially during times of recession and high food prices.

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