By on July 29, 2008

Good for whom?Back in the day, T. Boone Pickens questioned why his then-boss, presidential nominee Bob Dole supported ethanol. Dole's answer was telling. "Let me explain something to you about politics," the Kansas Republican replied. "There are 21 farm states, and that's 42 senators. Don't waste any more of our time or your time telling us it's a bad idea, because they're going to do it." And when politics trumps policy, you get stories like this one from The Oil Drum (TOD). With gas consumption likely to decline thanks to high prices, TOD wanted to know if federal ethanol mandates would sink with the market. The Department of Energy told them ethanol mandates are still set to increase, from 9b gallons this year to 12b gallons in 2011. Which raises a problem: what to do with it all. By DOE estimates, there won't be enough gasoline to "absorb" that much ethanol in standard E10 blends in 2011. There's also not enough E85 pumping stations (or "infrastructure") for the corn juice. In other words, the feds are mandating more ethanol than we can use so that Midwest senators will be pliant for other senators' pork projects. We've sure got this energy thing licked, huh?

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24 Comments on “E85 Boondoggle Of The Day: Undersupply...”


  • avatar
    marcj

    Love that cartoon – what’s Uncle Sam doing to that farmer? There’s a “cornhole” joke in there somewhere, I just can’t think of it right now…

  • avatar
    50merc

    Politics is the only commodity for which supply can perpetually exceed demand.

  • avatar
    bunkie

    There’s the underlying structure behind almost all our problems with the Congress. Corn, highways, safety, you name it, someone’s got their “two front trotters in the trough” to quote the Right Honorable Jim Hacker. And let’s not get started on their co-dependents, the Federal “we’ll just print more!” Reserve.

  • avatar
    racebeer

    It’s things like this that absolutely turn me off of politics. I have had my own personal campaign for 16 years of not voting for any incumbent on the ballot, no matter how much I might like the job they are doing. Personal opinion: limit both houses to single 4 year terms, limit campaign contributions from ALL sources to $500,000 total, and no campaigning until 90 days before the election. This perpetual election cycle has got to stop, or this country is going to completely stop functioning (if it hasn’t already).

    Rant over …. for now ………

  • avatar
    97escort

    I’m glad more are following Peak Oil as it unfolds. I comment as “x” over at TOD.

    Don’t believe all the anti ethanol rhetoric.
    There is a lot of fallacious reasoning behind it, and that is putting is mildly.

    As Peak Oil kicks in big time due to Jeffrey Brown’s Export Land Model, every last gallon of ethanol will be in demand. Cars need liquid fuel and when oil is burnt up it is gone. Ethanol is renewable.

    Comparing the two is comparing apples and oranges and proves nothing. Ethanol will be around long after the last drop of oil has been comsumed.

    TTAC posts often complain about car makers who can’t think ahead. Don’t make the same mistake with ethanol.

  • avatar

    This is working exactly the way it is supposed to.

    More biofuel + fewer oil imports = less dependence on OPEC.
    It also helps lower prices for everybody.

    Maybe the oil companies will now start to discount E85?

  • avatar

    It takes almost as much oil to grow the corn and turn it into ethanol as you get out of it, and industrial agriculture is also bad for the land (someone won a Pulitzer for a series of articles in the Des Moines Register on this subject several decades ago). So corn etoh is a boondoggle.

  • avatar

    97escort, ethanol in some form may make sense, but corn ethanol with immense market-distorting subsidies just seems absurd. what we should be doing is getting rid of sugar import tariffs and making brazilian sugar ethanol. is my understanding.

  • avatar

    David Holzman: It takes almost as much oil to grow the corn and turn it into ethanol as you get out of it

    That’s not true at all. It takes a lot of energy, but not from oil. Mostly natural gas or coal.

  • avatar
    simonptn

    a propos none of this …

    Just wanted to let you know there is a rant on Edmunds Inside Line worthy of TTAC

    Titled I Hate Hybrids

    http://blogs.edmunds.com/straightline/2008/07/i-hate-hybrids.html?tid=edmunds.il.home.photopanel..1.*

    Worthy of a jump.

  • avatar
    SunnyvaleCA

    Let’s say, for illustration, that the current situation comes up with 1 gallon of ethanol mandated for every 21 gallons of fuel sold. To achieve this, the fuel industry could serve the difficult-to-reach half of the consumers with straight gasoline and then serve E10 to the rest. Great.

    But congress passed laws that work on total absolute ethanol consumed, not the percentage relative to gas. So, as pointed out at The Oil Drum, if total fuel consumption decreases (due to high energy prices), then the ratio of ethanol to gasoline increases. Added to that the problem that congress has passed laws that require increased absolute ethanol use in the near future. So, for illustration, lets say we will have a situation where 2 gallons of ethanol are required to be consumed for every 18 gallons of fuel. This means 2:16 ratio of ethanol to gasoline. Even if the industry (with great difficulty) served 80% of the consumers with blended fuel, those consumers would need to run E16, which could cause a huge problem for lots of cars.

    The “solution” is that farm states should get the highest concentration of ethanol for everything so that the ethanol doesn’t have to travel far. Even new farm tractors should run E85 and the ethanol plants should use E100 to heat the mash to distill the stuff. Yes that would be stupid, but it would be smarter than trucking even more ethanol to even more remote locations.

  • avatar
    SunnyvaleCA

    Hey, it could be worse… that could be a hydrogen BMW in the picture.

  • avatar
    Geotpf

    racebeer: Term limits on either the House and Senate are unconstitutional (your other proposals, such as limiting the amount of money candidates raise and the time they can campaign, are unconstitutional as well), and amending the constitution on anything even mildly contraversal (such as your proposals) is impossible. Whenever I see somebody propose something that is unconstitutional, I know they are ignorant as to the way things work in the real world. I’m not trying to flame you, I just want you to deal with the reality of the situation and rejoin the real world.

  • avatar
    dwford

    I’ve been wondering when people would start asking where all this ethanol is supposed to go…

    Obviously Congress didn’t mandate that E85 pumps be built at every gas station or that ALL new cars be flex fuel so that we would actually use less foreign oil. That would have been closer to a real solution. A future Congress will deal with this absurdity when the industry squeals enough.

  • avatar
    dwford

    oooh, I know. We will create a “Strategic Ethanol Reserve” in case terrorists attack our fields!!! Genius!!

  • avatar
    bluecon

    The USA uses around a 150 billion gallons of gasoline a year. Now they are using around 30% of the corn crop to produce around 7 billion gallons of ethanol. So they are going to use 50% of the corn crop to produce 12 billion gallons of ethanol? And there is no gain from producing the ethanol. BOONDOGGLE at it’s government finest. And also entirely unrealistic. Wait till there is a meat shortage and meat sky rockets in price. Another result of the ethanol boondoggle.

  • avatar
    capeplates

    Wikepedia describes ethanol as “is best known as the type of alcohol found in alcoholic beverages and in thermometers. In common usage, it is often referred to simply as alcohol.” If there is a over production reduce the price, sell it as booze and we can all get P***** and forget about problems in the auto industry

  • avatar
    shaker

    They recently instituted a 10% “drink tax” in Allegheny County (Pittsburgh, PA), that people are bitching about; we could certainly use the ethanol!
    The “farmer” in the ‘toon should have an “ADM” patch on his overalls.

  • avatar
    racebeer

    Geotpf: I realize that the “proposals” I suggested are unconstitutional, and as I stated, it was just a rant on my part. When I continue to see the crazy decisions out esteemed legislators make, I would just like to get rid of the majority of those idiots who have become so entrenched in the “system” they have no idea how the rest of the real world actually works.

    End Rant, Part Dux ………..

  • avatar
    Pch101

    It takes almost as much oil to grow the corn and turn it into ethanol as you get out of it

    Despite what gets posted on internet forums, studies show that ethanol production is energy positive, particularly when the food output is taken into account. The byproduct of making ethanol is distiller grains, which can be used for animal feed and as a soil nutrient. Overall, you get more BTU’s than you put in.

    The USA uses around a 150 billion gallons of gasoline a year. Now they are using around 30% of the corn crop to produce around 7 billion gallons of ethanol.

    What you’ve missed is that corn production is soaring (or at least it was until Iowa flooded this year.) The increase in ethanol production has been offset by a larger harvest. There’s enough corn for the US to export it and to include it in every food product imaginable, so there is no Peak Corn, Peak High Fructose Corn Syrup or any shortage of it.

    That’s not to say that ethanol is the key to salvation or that corn is the best way to make it, but a lot of the complaints about it are inaccurate.

  • avatar
    ZoomZoom

    racebeer :

    …Personal opinion: limit both houses to single 4 year terms…

    This would be a bad idea for Congress. I’m not opposed to a maximum limit for time-served. It’s the treat-both-houses-the-same-way line of thinking that concerns me.

    The founding fathers staggered things so as to avoid disruptions in Congress doing the work of the people.

    Re-electing everybody every four years would be like having a revolution every four years. Sounds good on the surface, but it would be very disrupting to essential services, military troop training, the legal system, our treaties, agreements, and relationships with other countries and the international community, and economic activity.

    Also, the founding fathers wanted to prevent short-term thinking (of the electorate) from having long-term impact in policy. By having the Senate abide by the same term limits as the House, you effectively end up with two Houses of Representatives; ie, short-term thinkers who blow wherever the wind blows. This could be very dangerous.

    Article XX (20) of the US Constitution lays out the plan. With some exceptions, it’s a good one.

    Every other year, the entire House of Reps is up for re-election. All at the same time.

    The entire Senate is never up for re-election at the same time. They have a 6-year term. Every other year, only one-third of the Senate is up for re-election. It would take no less than six years for the electorate to completely replace the Senate.

    So a single issue, a single voter’s “sticking point” (say, a tea-tax) is not likely to cause a shocking change in the look and feel of our government. This is actually good for economic activity. Economic activity does not function efficiently in unpredictable political environments. Look at Zimbabwe, Venesuela, Cuba for examples.

    I think we would have been far better off if the founding fathers had establish the following additional restrictions on Congressional posts:

    1. A maximum number of terms served.

    Let’s face it, it’s plain ridiculous to have a house member serving for 12 to 16 years, or a senator serving for 18, 24, or more years. We need to encourage and help these guys retire more promptly.

    1a. Three or four 2-year terms should be more than enough time in the House.

    1b. Two six-year terms is more than enough time for a sitting senator to do a lifetime’s worth of damage.

    2. Make our congressmen and congresswomen return to private life, and legally prevent them from escaping the laws that they passed while in office. Most voters are completely unaware that both houses of Congress exclude themselves from many of the laws that they pass for everybody else. This should be constitutionally prevented from happening!

    3. Make the House of Representatives BIGGER. Yes, I said it, bigger. Why? Because more members of the house would equal fewer voters per member. We stopped growing the House of Representatives decades ago, but the US population has grown. This has created a power imbalance in the House, and has brought the House of Representatives out of line with the intent of the Founding Fathers.

    A bigger House of Representatives would also have the effect of somewhat decreasing the power of any individual Senator, and possibly restoring some balance in terms of electoral votes.

    4. Items 1 thru 3 above would probably reduce or eliminate the need for any type of campaign finance reform. Think about it; if you are somewhat less powerful, are constitutionally limited to a maximum service of six years or so, AND you get no special legal dispensations after you leave office, there’ll be a lot less incentive to pass laws tweaking the system to allow you to continually get re-elected.

    Just a few thoughts, coming from one sentence written by a fellow member. Sorry, I tend to run on at times.

  • avatar
    Airhen

    EJ_San_Fran :
    July 29th, 2008 at 3:32 pm

    Maybe the oil companies will now start to discount E85?

    Yeah, right behind the government lowering taxes. LOL

  • avatar
    bluecon

    What you’ve missed is that corn production is soaring (or at least it was until Iowa flooded this year.) The increase in ethanol production has been offset by a larger harvest. There’s enough corn for the US to export it and to include it in every food product imaginable, so there is no Peak Corn, Peak High Fructose Corn Syrup or any shortage of it.
    Quote: Walter E. Williams

    “Anyone with an ounce of brains would have realized that diverting crops from food to fuel use would raise the prices of corn-fed livestock, such as pork, beef, chicken and dairy products, and products made from corn, such as cereals. Ethanol production has led to increases in other grain prices, such as soybean and wheat. Since the U.S. is the world’s largest grain producer and exporter, higher grain prices have had a huge impact on food prices worldwide.”

    http://www.townhall.com/columnists/WalterEWilliams/2008/07/30/environmentalists_hold_on_congress

  • avatar
    Pch101

    Anyone with an ounce of brains would have realized that diverting crops from food to fuel use would raise the prices of corn-fed livestock, such as pork, beef, chicken and dairy products, and products made from corn, such as cereals.

    How does this loaded, blanket statement negate the fact that US corn production increased by about a third between 2002 and 2007?

    (Oh, I know — it doesn’t.)

    If the US had a corn shortage, it wouldn’t be exporting 10% of the corn crop and putting corn sweetener in everything that moves (and a lot of things that don’t.)

    Crops are like oil — global prices are rising because of a combination of rising demand in developing countries (now that they earn more, some of them can afford to spend it) and futures speculation, plus the cost of fertilizer has been increasing.


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