ethanol

What’s In Store for Egypt After Mubarak’s Departure?

by Hans Bader on February 12, 2011 · 1 comment

in Agriculture, Energy, Ethanol, International, Trade

Recently, Egypt’s pro-American dictator, Hosni Mubarak, was forced to resign after 30 years in power, and forced to give way to a military-controlled government.  Victor Davis Hanson has some interesting reflections on the revolution in Egypt at this link.

Earlier, we discussed the role of ethanol subsidies and biofuel mandates in increasing support for the Muslim Brotherhood, an anti-American group opposed to Mubarak, at this link.  By indirectly increasing wheat prices, ethanol subsidies drove up unrest in Cairo’s slums, which are more supportive of the Muslim Brotherhood than they are of Egypt’s historically much smaller pro-western democracy movements.  (Egyptians historically have spent nearly half their income just on food — more than that in the slums of Cairo and Alexandria, Egypt’s largest cities).

The Washington Post‘s editorial board and various columns in the Post, like one by Professor Tim Searchinger, agreed about the folly of ethanol subsidies and their role in contributing to misery and unrest among Egypt’s poorest.

Lowest Corn Reserves in 15 Years — Food Prices to Rise

by Fran Smith on February 11, 2011

in Agenda for Congress, Agriculture, Ethanol

The New York Times noted in an article yesterday that food prices are expected to rise this year as a result of significantly lower supplies of corn reserves — the lowest since 1996 — and a higher use of corn for ethanol. The food vs. fuel tug continues, with the ethanol mandate, the ethanol tax credit, plus massive subsidies causing more and more corn to be diverted to ethanol production rather than food. (See CEI colleague Brian McGraw’s post today.)

The U.S. Department of Agriculture announced February 9 that U.S. corn stocks are projected to be 70 million bushels lower this month, while the use of corn for food, seed, and industrial use will be higher than expected. USDA also said that corn for ethanol use is expected to be 50 million bushels higher — with a record ethanol production for December and January.

With corn prices almost doubling from six months ago, USDA is projecting that those food items most affected by corn used for feedstock will rise in 2011. Thus, pork prices are likely to rise 3.5 to 4.5 percent, beef prices, 2.5 to 3.5 percent, poultry prices, 2 to 3 percent, egg prices, 2.5 to 3.5 percent, and dairy, 4.5 to 5.5 percent.

Check out this and some of the extensive articles CEI has published on the unintended consequences of the ethanol program.

Egyptian Riots Fueled by Ethanol Subsidies and Biofuel Mandates

by Hans Bader on February 4, 2011 · 5 comments

in Agriculture, Energy, Ethanol, International, Trade

As world food prices hit a record high, protests in Egypt demand the removal of the country’s pro-American dictator, Hosni Mubarak. No one can predict with certainty whether his removal after 30 years in power would lead to a constitutional democracy, or a theocratic despotism. The likelihood of an even worse regime replacing Mubarak is real, and has been increased by the widespread diversion of cropland to produce biofuels rather than food. That in turn has led to rising food prices that have fueled unrest among the poor in the teeming slums of Egypt’s capital city of Cairo.

Increased food prices have also led to increasing support for the anti-American Muslim Brotherhood, which has ties to the terrorist group Hamas: it provides relief and welfare services in the slums, increasing its popularity in times of economic distress, and it enjoys greater support among the country’s poor than among Egypt’s smaller and more Western-oriented middle class.

The Telegraph, a leading English newspaper, calls the recent unrest in Egypt and the Middle East “food revolutions.” It points out that “biofuel mandates” have “diverted a third of the US corn crop into ethanol for cars,” reducing food supplies and driving up food prices. “So instead of growing wheat, our farmers are growing corn in order to cash in on ethanol subsidies.”

Egypt is the world’s largest wheat importer, and  imports “more than half of its food supply.” As CNBC notes, “It is food inflation that is” most fueling opposition to the Mubarak regime among the country’s poor. Egyptians have historically spent over 40 percent of their income just on food.

As Slate notes, the “anti-Western” Muslim Brotherhood “remains the only political movement” in Egypt that is “capable of providing nongovernmental charitable services. This gives it a reliable political base in the slums of Cairo and Alexandria.” Rising food prices have cemented that base, and driven previously apathetic slum-dwellers into the streets, shifting the locus of opposition away from the more Westernized middle class.

Obama has been an avid supporter of ethanol subsidies, with close links to the ethanol lobby, unlike Obama’s 2008 opponent, John McCain, who opposed ethanol subsidies. The Obama administration has pushed ethanol mandates, even though they have a history of helping spawn famines and food riots overseas. For example, the costly climate-change legislation backed by the administration contained ethanol subsidies. The administration supports them even though ethanol makes gasoline costlier and dirtier, increases ozone pollution, and increases the death toll from smog and air pollution. Ethanol production also results in deforestation, soil erosion, and water pollution.

Leading environmentalists have lamented the devastating impact of ethanol and biofuel subsidies on the global environment.

Even commentators with close links to the Obama administration have admitted that ethanol subsidies are a terrible idea. Matt Yglesias at the liberal Center for American Progress, which has close ties to the administration, admits that “ethanol subsidies aren’t a good way to clean the environment, but they’re a great way of raising the price of agricultural commodities.” Economists more critical of the Obama administration, such as Larry Kudlow, have been scathingly critical of ethanol subsidies, linking them to the recent unrest in Egypt and “skyrocketing food prices.”

Ethanol mandates also contributed to starvation, food riots, and a growing anti-American uprising in Afghanistan back in 2008.

Ethanol and the Egyptian Riots

by Hans Bader on February 2, 2011 · 2 comments

in Agriculture, Energy, Environment, Ethanol, International

Ethanol subsidies helped cause the Egyptian riots, contributing to the “skyrocketing food prices” that triggered “the massive unrest now occurring in Egypt,” argues economist and syndicated columnist Larry Kudlow, in “Bernanke and Ethanol Sink Egypt.” “In 2001, only 7 percent of U.S. corn went to ethanol. By 2010, the ethanol share was 39 percent. So instead of growing wheat, our farmers are growing corn in order to cash in on ethanol subsidies.” That harmed Egypt, a major wheat importer. Another factor was the Federal Reserve’s inflationary monetary policy, whose effects have already been felt overseas: “In dollar terms, the price of wheat has soared 114 percent over the past year. Corn has surged 88 percent.” (The Fed is even printing money so that the government can buy its own bonds to facilitate record deficit spending.)

Commentators across the political spectrum worry about the effect of ethanol subsidies.  The environmentalist Jeremy Bloom has an article titled “Egypt’s Ethanol Revolution: Bad U.S.  Policy Driving Up Worldwide Food Price.” Rob Port asks, “Are Ethanol Subsidies the Root Cause of Egyptian Protests?”

As I previously noted, the rise in food prices in Egypt seems to have strengthened the anti-American Muslim Brotherhood, rather than the small pro-western reform movements in Egypt, by radicalizing the slums of Cairo, whose residents sometimes rely on relief provided by the Muslim Brotherhood (the only Egyptian political movement that provides non-governmental charitable services), and who have little connection to the Westernized middle class.

Obama’s State of the Union: A Blueprint for Crony Capitalism and Costly Educational Failures

by Hans Bader on January 26, 2011

in Economy, Employment, Energy, Environment, Politics as Usual, Stimulus to Nowhere

In his State of the Union address, President Obama called for even more spending on his cronies — what he euphemistically referred to as “investments” in “clean energy technology.” Such spending benefits companies that donate millions to liberal politicians, like GE,  which recently spent  $65.7 million on lobbying to extract special favors from the government.

As the Washington Post notes, GE received massive taxpayer bailouts on special, preferential terms not available to other companies:

General Electric, the world’s largest industrial company, has quietly become the biggest beneficiary of one of the government’s key rescue programs for banks. At the same time, GE has avoided many of the restrictions facing other financial giants getting help from the government. The company did not initially qualify for the program.  .  .But regulators soon loosened the eligibility requirements, in part because of behind-the-scenes appeals from GE.

GE’s CEO, Jeffrey Immelt, is the “Chairman of the President’s Council on Jobs and Competitiveness.”

The “clean energy” spending Obama wants includes “initiatives aimed at building the renewable-energy sector — which received billions of dollars in stimulus funding.”

This is a bad sign for American workers, because such green jobs programs have wiped out thousands of American jobs in the past.  The $800 billion stimulus package used “green-jobs” subsidies to send American jobs overseas.  79 percent of those subsidies went to foreign firms, such as an Australian firm that imported Japanese wind turbines, effectively outsourcing American jobs.  (The stimulus package also wiped out jobs in America’s export sector.)  Moreover, some “green jobs” funding actually damages the environment, like ethanol subsidies:  ethanol mandates actually harm the environment, yet the Obama administration apparently considers them to be a “green jobs” program.

Echoing earlier reports that he would advocate “new government spending” on education, Obama attacked the idea of scaling back massive increases in education spending. He called cutting education spending “like lightening an overloaded airplane by removing its engine.” Lost in his hyperbole was the fact that America already spends much more per capita on education than most other wealthy industrialized countries, with worse results.  As spending has exploded, college students are spending much less time studying and reading than they used to.

Dumping more money on the educational system is unlikely to spur economic growth, since so many college students learn little in college, are not interested in learning, and only go to college in order to get paper credentials rather than an education. Obama wants all Americans to attend at least one year of college, saying in his address that “higher education must be within reach of every American.”

Those paper credentials are increasingly useless to many who obtain them.  Most people who went to college because of rising college-attendance rates in recent years wound up in unskilled jobs (including 5,057 janitors who have Ph.D’s or other advanced degrees), while tuition skyrockets. (100 colleges charge at least $50,000 a year, compared to five in 2008-09.)  Bush increased federal education spending 58 percent faster than inflation, while Obama seeks to double it.

Colleges are so awash in money that many elite colleges are using it to rapidly expand educational bureaucracies.  For example, Wake Forest University increased spending on administrators by 600 percent.

Unlike other countries, which focus on educating engineers and other economically-productive occupations, America focuses on superficial, ideologically-fashionable liberal-arts majors.  The Obama administration seems more concerned about the gender ratios in college science departments than the small number of Americans who go into science, and is now contemplating caps on the number of male science students under Title IX to promote what it perceives as gender equity.  Such caps would be based on the Obama administration’s faulty interpretation of Title IX.

Obama Policies Fuel Global Food Crisis Through Ethanol Mandates, While Fostering Obesity in America

by Hans Bader on January 22, 2011

in Agriculture, Energy, Environment, Ethanol, International

Food prices are soaring all over the world. The global food chain is reportedly stretched to the limit, fueled by the fact “that more than a third of the corn produced in the U.S is now used to make ethanol.” As a result of such “bio-fuels” subsidies, one of the world’s largest food producers predicts a “global food crisis.”

Unfortunately, the Obama administration has long pushed ethanol subsidies, even though such subsidies have a history of spawning famines and food riots overseas. For example, the costly climate-change legislation backed by the administration contained massive ethanol subsidies.

The administration is now forcing up the ethanol content of gasoline through EPA regulations, heedless of the fact that ethanol makes gasoline costlier and dirtier, increases ozone pollution, and increases the death toll from smog and air pollution. Ethanol production also results in deforestation, soil erosion, and water pollution.

Back in 2008, leading environmentalists lamented the devastating impact of ethanol subsidies on the global environment and the world’s poor. They noted that thanks to ethanol, “deadly food riots” had already “broken out in dozens of nations,” such as “Haiti and Egypt.” And they pointed out that “food-to-fuel mandates are leading to increased environmental damage. First, producing ethanol requires huge amounts of energy — most of which comes from coal. Second, the production process creates a number of hazardous byproducts, and some production facilities are reportedly dumping these in local water sources. . .Most troubling, though, is that the higher food prices caused in large part by food-to-fuel mandates create incentives for global deforestation, including in the Amazon basin. . . huge swaths of forest are being cleared for agricultural development. The result is devastating: We lose an ecological treasure and critical habitat for endangered species, as well as the world’s largest ‘carbon sink.’ . . .the net impact of the food-to-fuel push will be an increase in global carbon emissions.”

By increasing world food prices, ethanol subsidies also fostered Islamic extremism in poor countries like Afghanistan that import much of their food.

Ethanol subsidies are not the only way that the Obama administration is harming poor people. The administration is also discouraging poor Americans from purchasing cheap, nutritious food. For example, it has also disparaged the consumption of potatoes, banning white potatoes from the federal WIC program, while allowing WIC money to be spent on far less nutritious things that are starchy, fatty or sugary (such as apple sauce, which has no nutrition unless vitamin C is artificially added to it).

The potato is superior to most foods in nutrients per dollar (and per acre of farmland), so much so that “in 2008, the United Nations declared it to be the ‘Year of the Potato.’” (Thank you again to the ancients of the Andes for this marvelous little food.)

“This was done to bring attention to the fact that the potato is one of the most efficient crops for developing nations to grow, as a way of delivering a high level of nutrition to growing populations, with fewer needed resources than other traditional crops. In the summer of 2010, China approved new government policies that positioned the potato as the key crop to feed its growing population.” Potatoes provided much of the agricultural surplus that made the Industrial Revolution possible.

Potatoes are more nutritious than other starchy foods like rice and bread, and “are a good source of vitamins.” They have a lot of vitamin C (much more than a banana or an apple), and potassium levels slightly higher than potassium-rich bananas). Potatoes also have all 8 essential amino acids, unlike most other staple foods like corn and beans.

The Obama administration is also using federal funds to subsidize the opening of an International House of Pancakes in Washington, D.C., despite its sugary and fattening entrees, and the development of high-calorie foods that benefit politically connected agribusinesses.

Potato Diet Improves Man’s Health; Obama Administration Bans Potatoes from WIC Program

by Hans Bader on December 27, 2010 · 1 comment

in Health and Illness, Nanny State, Personal Liberty

Chris Voigt lost 21 pounds and improved his health by living on a potato-only diet for 60 days.  Potatoes are more nutritious than other starchy foods like rice and bread, and “are a good source of vitamins.”  They have a lot of vitamin C (much more than a banana or an apple), and potassium levels slightly higher than potassium-rich bananas).

But the Obama administration, which does not understand nutrition, has banned white potatoes from the WIC program (for school lunches and poor mothers), based on the false belief that potatoes are unhealthy.  (Yet critics of the Obama administration’s food nannyism get lectures from liberal journalists.)

Potatoes are critically important in providing the poor with cheap, nutritious food.  As Voigt notes,”In 2008, the United Nations declared it to be the ‘Year of the Potato’. This was done to bring attention to the fact that the potato is one of the most efficient crops for developing nations to grow, as a way of delivering a high level of nutrition to growing populations, with fewer needed resources than other traditional crops. In the summer of 2010, China approved new government policies that positioned the potato as the key crop to feed its growing population.”

After they were brought from America to Europe, potatoes “rescued the Western World” from recurrent famines, and made the Industrial Revolution possible.  They did this by radically increasing the amount of food that hungry peasants could grow per acre, and by enabling farmers to provide the agricultural surplus that would feed burgeoning industrial populations.

In addition to trying to take away poor people’s potatoes, the Obama administration has pushed ethanol subsidies that turn food into fuel and contribute to a “global food crisis” by spawning famines overseas.  The Obama administration is also using federal funds to subsidize the opening of an International House of Pancakes in Washington, D.C., and the development of high-calorie foods that benefit politically connected agribusinesses.

Ethanol and NASCAR

by Brian McGraw on December 23, 2010 · 8 comments

in Energy, Ethanol

The ethanol industry earlier this year teamed up with NASCAR in order to better promote expensive, highly subsidized, not so environmentally friendly homegrown, “renewable” ethanol, including the usage of E15 by NASCAR competitors. What could be more American than combining America’s love for driving cars really, really fast with the idealistic notion of the heroic family farmers growing our own fuel here in America? (Nothing)

The framing of ethanol in the announcement is generous: “NASCAR Gives Ethanol Green Flag.” Given the announcements you might expect that the industry is actually running on ethanol entirely, rather than a blend of 85 percent petroleum and 15 percent ethanol. An alternative framing might look something like this: “NASCAR decreases fuel blend from 90 percent petroleum to 85 percent.” This wouldn’t provide quite the same inspiring sound-bite. (I’m also assuming that NASCAR currently uses a 10 percent ethanol blend which might not be correct)

Take away quotes from the NPR piece:

So, if Jeff Gordon wins the Sprint Series on Sunoco Green E15, ethanol must be liquid gold, right?

It really depends whom you ask. If Growth Energy CEO Tom Buis has your ear, you might think ethanol is good for you.

They wouldn’t be going backwards in choosing their fuel — none of these racing series would,” Buis says. “And so it’s a tremendous opportunity to demonstrate to consumers what a great fuel it is.”

Charles Drevna, president of the National Petrochemical and Refiners Association, disagrees.

“I think it is a complete bastardization of comparison to say, ‘Well, NASCAR can use it, then the average driver can use it’ — no more than you can say, ‘Look, if it is good enough for NASA to put rocket fuel in Challenger, then we can put it in automobiles, too,” Drevna says. “Completely different applications. Comp­letely different fuels.”

Drevna is correct here. The engines of racing cars designed specifically for NASCAR are almost certainly equipped to handle different fuels than that average American care. I trust that they work fine with E15. This link indicates that the average engine costs anywhere from $45,000-$60,000 which is more than the entire sticker price of the majority of cars. They are unlikely to be used for 15+ years like the average American car, which is why these comparisons are useless.

The NPR piece above is one part of a 3-part series on ethanol. Their earlier piece covered the shortcoming of ethanol and the absurdity of the tax incentives they will receive through 2011. It seems to provide an overly negative review of ethanol, citing a net negative energy balance (this is contested by credible people) and potentially low-balling the number of jobs it supports. Overall it is accurate. The RFA responded, and provided a tale filled with many more falsehoods than the potential misstatements by NPR.

A few of the main points from RFA’s response:

American ethanol is the only alternative to imported oil.

Flatly untrue. It is unlikely that it would ever be even possible (let alone desirable) to produce a sufficient amount of corn ethanol to completely displace oil imports. Furthermore, there are other alternatives to oil imports such as ethanol imports, electric cars, and other future technological innovations.

Ethanol offers lots more energy than it takes to produce

Grey area. The USDA study of a 2.3 EROEI is pretty misleading, as documented here by energy blogger Robert Rapier. Furthermore, the assertion that petroleum is a net negative energy balance is laughable and defies common sense, to the point that even I’m surprised that they are willing to publish this and pretend to maintain any shred of credibility. If ethanol provided such a higher return on inputs than petroleum, why would anyone use petroleum in the first place? Why would ethanol need subsidies and mandates to survive? Here is a longer piece explaining that the RFA is comparing two completely different things. My guess is that overall ethanol provides a slightly positive energy balance, with some companies ending as a net negative and some positive depending on location, production structures, etc.

It is worth pointing out though that this critique of ethanol isn’t all that important. For example, tons of energy is lost when electricity reaches its endpoint (originating in a power plant and ending at your refrigerator). This is necessary , and not a bad thing, as the energy has to be converted into a form that the technologies are able to use. You can’t put a piece of coal in your refrigerator. The same is true of fuel. Car engine’s are designed to mainly run on fuel blends. Suppose ethanol required huge fossil fuel inputs in the form of coal or natural gas. If the ultimate energy source ended up being cheaper than petroleum, and something cars were able to use, it would sell.

Ethanol has little impact, if any, on consumer food prices.

False. The quote Dineen uses is taken out of context: “Just a few mere months ago, the World Bank found “…the effect of biofuels on food prices has not been as large as originally thought.” The World Bank study he references was referring to the 2007-2008 food crisis (large spike in food prices). The study concluded that biofuels didn’t deserve much blame for this particular spike (though this is only one study, other studies attributed more blame to biofuels). That study did not conclude that biofuels or ethanol has little effect on food prices generally. It is obvious to anyone with a basic understanding of microeconomics that it does.

Clean-burning American ethanol is good for the environment. In fact, a recent study published in Yale University’s Journal of Industrial Ecology found that greenhouse gas emissions from ethanol are “…equivalent to a 48% to 59% reduction compared to gasoline, a twofold to threefold greater reduction than reported in previous studies.”

Overly optimistic. These studies are incredibly complex, and the RFA looks at one while ignoring the others which don’t provide the desired results. In response to this claim, look at a comment posted at RFA by someone claiming to be the editor of the journal:

The study in Yale’s Journal of Industrial Ecology by mentioned in this blog posting above is one in a **group** of articles on corn ethanol. The 59% reduction in greenhouse gas emissions is the conclusion of one of that set of articles, but it is contested.

Reid Lifset
Editor-in-chief
Journal of Industrial Ecology
Yale University

So, the RFA tactic is obviously to pick your favorite study and throw the rest out, such as the studies that conclude that over its life cycle ethanol actually produces more net GHG emissions than petroleum.

Photo Credit

NPR Covers Corn Ethanol Boondoggle

by Fran Smith on December 22, 2010 · 4 comments

in Energy, Ethanol

NPR’s “Morning Edition” has finally caught on to the ethanol boondoggle. It’s doing a three-part series on ethanol that started yesterday. And it gets into some of the real issues, especially relating to corn ethanol. CEI has been pointing out that the ethanol program involves a mandate setting the amount of ethanol that must be blended with gasoline, a tax credit that goes to blenders of ethanol, and a steep tariff on imported ethanol. (See CEI video, “The Insanity of Ethanol Policy.”)

NPR got this issue right:

The question is: Does it deserve a multibillion-dollar tax credit, on top of a tariff, on top of a huge and growing mandate to use it?

NPR’s second installment brought up the food vs. fuel issue, that is, all the incentives to grow corn for ethanol production are decreasing the supply of corn available for food and for feed and driving up those costs.

Here’s what a prominent agricultural economist said to NPR:

“I don’t see why we can really justify subsidies, when all that does is raises cost of producing food,” says economics professor Bruce Babcock, of Iowa State University.

Ethanol policies increase the cost of food at least 1.5 percent, Babcock says. And the impact on meat prices is significantly greater.

It’s economics 101, he says. Ethanol plants increase the demand for corn, driving up the prices for other buyers – like livestock producers. International demand is up, too – and we’re exporting more ethanol than ever before. Many grain farmers are seeing record incomes this year.

Yet how did policymakers deal with ethanol in the lame-duck Congress? In the omnibus tax bill, they voted to extend the ethanol tax credit and the tariff on ethanol imports for one year. Ducks and pork are a tasty treat for politicians.

HT: Iain Murray

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

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