E85 Boondoggle Of The Day: What's Good For Ethanol Is Good For GM Is Good For America

Edward Niedermeyer
by Edward Niedermeyer

This time the bearer of good news is retired General Wesley Clark and his “ Growth Energy” K-Street advocacy group. The special K says increasing the ethanol blend limit to E15 could create 136,101 new jobs and inject $24.4b into the US economy annually. How? According to the firm’s appalling report, bumping the federal blending mandate to E15 would double the “demand” for ethanol. As the report notes, in the mother of all Freudian slips “6 bgy of production capacity would be required to produce 20.4 bgy of ethanol (including current reserve capacity). This level of expansion could be met by the construction and operations of 60 100 bgy corn ethanol plants (emphasis added).” Of course they meant 60 100 mgy plants, but numbers have just become so darn confusing since billion became the new million.

The logic of bailout nation pervades the entire report, which is presented entirerly in terms of “economic impact.” Using data from their clients and government Regional Industrial Multipliers, they throw direct and secondary economic impacts into battle for King Corn.

The upshot? 136,101 new jobs and $24.4 billion “injected” into the US economy annually. They say. Oh, and if you like that, ask us about our all-new E20 blend. Or perhaps E30 for double the economic benefits?

The glaring omission from the report: any mention of how doubling ethanol production will actually happen. They just wrote the EPA and asked for a waiver ( PDF). But the answer is clear. Having hit the blend wall on its much-beloved “blenders credit,” the ethanol industry is out of growth room. Since real demand has nothing to do with subsidy programs, Growth Energy simply wants the EPA to “allow” their specific ethanol-blending clients to blend E15. Oh yeah, and cash in on the 51 cents per gallon of ethanol blended money shower.

Ethanol blenders already received $3b in 2007 from the blenders credit alone, an amount that dwarfs all other renewable fuel subsidies. Expanding blending mandates (volume, not percent ethanol) will push that number upwards anyway, rising from 7b gallons in 2007 to 9b in 2008, and peaking at 11b gallons in 2011.

If allowing E15 at the current “blend wall” would bump production to about double current levels, by 2011 things will be out of control. And don’t forget that the Renewable Fuels Association has already called for an ethanol bailout of $1b in short-term credit and $50b in long-term loan guarantees.

Green Car Congress notes that Ford and GM are standing by their corn, proving that ethanol is yet another underwater chunk of the auto bailout iceberg (see also: dealers, captive finance, suppliers). GM’s Beth Lowery notes that “GM has been, and continues to be, one of the strongest advocates for ethanol use.”

Because friends with K-Street teams are the best kind of friend in the world.

Edward Niedermeyer
Edward Niedermeyer

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  • Fallout11 Fallout11 on Mar 10, 2009

    Ethanol from corn remains a net energy sink, contains 30% less energy per unit mass than gasoline, and has always cost more on spot price markets despite 30 years of subsidies. Chemist Robert Rapier does a pretty good (and objective) job of analyzing the situation here: http://i-r-squared.blogspot.com/search?q=ethanol&x=0&y=0 Finally, you're still putting productive farmland to use to grow agricultural products which will then be burned in your gas tank. When explained that way (i.e. "we put food in the gastank") even most children readily judge it a poor plan.

  • R H R H on Mar 10, 2009

    I am all for this -- assuming that every time parts fail in my sportsbike or sports car prematurely due to increased ethanol content, General Wesley Clark will replace them personally & free of charge.

  • Wolfwagen Is it me or have auto shows just turned to meh? To me, there isn't much excitement anymore. it's like we have hit a second malaise era. Every new vehicle is some cookie-cutter CUV. No cutting-edge designs. No talk of any great powertrains, or technological achievements. It's sort of expected with the push to EVs but there is no news on that front either. No new battery tech, no new charging tech. Nothing.
  • CanadaCraig You can just imagine how quickly the tires are going to wear out on a 5,800 lbs AWD 2024 Dodge Charger.
  • Luke42 I tried FSD for a month in December 2022 on my Model Y and wasn’t impressed.The building-blocks were amazing but sum of the all of those amazing parts was about as useful as Honda Sensing in terms of reducing the driver’s workload.I have a list of fixes I need to see in Autopilot before I blow another $200 renting FSD. But I will try it for free for a month.I would love it if FSD v12 lived up to the hype and my mind were changed. But I have no reason to believe I might be wrong at this point, based on the reviews I’ve read so far. [shrug]. I’m sure I’ll have more to say about it once I get to test it.
  • FormerFF We bought three new and one used car last year, so we won't be visiting any showrooms this year unless a meteor hits one of them. Sorry to hear that Mini has terminated the manual transmission, a Mini could be a fun car to drive with a stick.It appears that 2025 is going to see a significant decrease in the number of models that can be had with a stick. The used car we bought is a Mk 7 GTI with a six speed manual, and my younger daughter and I are enjoying it quite a lot. We'll be hanging on to it for many years.
  • Oberkanone Where is the value here? Magna is assembling the vehicles. The IP is not novel. Just buy the IP at bankruptcy stage for next to nothing.
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