Ethanol under attack

With the prices of food commodities soaring Texas governor Rick Perry has asked the EPA to waive the ethanol requirements for gasoline in his state. From the New York Times:

Mr. Perry says the billions of bushels of corn being used to produce all that mandated ethanol would be better suited as livestock feed than as fuel.

Feed prices have soared in the last two years as fuel has begun competing with food for cropland.

“When you find yourself in a hole, you have to quit digging,” Mr. Perry said in an interview. “And we are in a hole.”

Further attempts to provide relief from ethanol mandates have been filed legislatively.

Ethanol is under siege from other quarters. Senator Kay Bailey Hutchison, Republican of Texas, has introduced legislation calling for a freeze of the mandate at the current level, saying it “is clearly causing unintended consequences on food prices.” The measure is co-sponsored by 11 other Republican senators, including John McCain, the presumptive presidential nominee.

And recent testimony by Fed Chairman Bernanke advocated elimination of the tariff on Brazilian sugar ethanol, currently at 51 cents per gallon. See my prior post on ethanol and the Brazilian import issue.

With food prices causing hunger all over the world isn’t it time to look at our policies here?

In a new report, the Organization for Economic Cooperation and Development is critical of biofuels, saying further development will raise food prices while doing little for energy security.

Well I think both points have been proven true. But the ethanol boondoggle continues unabated, with supporters launching political counter-attacks.

In ethanol’s home ground of the Midwest, where much of the corn is grown and the additive is made, Mr. Perry’s petition was opposed by 12 governors. Senator Charles Grassley, Republican of Iowa, accused the Grocery Manufacturers Association, the group leading the public relations fight against ethanol, of “treasonous” acts.

Ethanol supporters also hold out ethanol as critical to our energy future.

A cut in the mandate might be the beginning of a slippery slope that could mark the end for ethanol, said Lee Reeve, one of the pioneers of the industry. His Garden City, Kan., plant has been in operation since 1982. “If this goes through, I guarantee you that by next Thursday there would be arguments about how we should get rid of the mandate entirely,” he said. “And where are you going to find the oil to replace eight or nine billion gallons of ethanol?”

An expensive boondoggle that ought to have its taxpayer subsidy revoked. It is ironic that some of the biggest ethanol supporters routinely lecture us about the sanctity of “free markets” and “free trade”, except for Ethanol.

Read the New York Times story here.

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1 Response to Ethanol under attack

  1. Jules Gordon says:

    Your Honor,
    The following is political partisan free.( a curse on both parties)

    I love it when you occasionally slip into the correct territory. The congress of the united states should repeal all the regulations and tariffs they have passed that have collectively paved the way to higher fuel and food costs.

    Let the free market correct itself and things will improve. In spite of it all, business hates chaos. Use the Taft Hartley laws to insure no collusion between the oil companies that will restrain trade.

    Read Doug Newell’s letter to the editor (Eagle Tribune) regarding Carol Shea-Porter’s useless menus of fuel fixes that counts more regulation to accomplish it. (it won’t).

    Ethanol is not efficient and too costly to implement.

    We have already seen what it does to the food market.

    Remember, lawyers can’t fix technology, they can only screw it up.



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