By on June 12, 2010

Slate‘s Robert Bryce reckons so. With ethanol producers and blenders bouncing off the ethanol “blend wall” and into bankruptcy court, Bryce figures

Now the industry is counting on a president beleaguered by the made-for-TV crisis in the Gulf of Mexico to help it out. And he appears ready to do just that. On April 28, six days after the Deepwater Horizon rig sank, President Obama visited an ethanol plant in Missouri and declared that “there shouldn’t be any doubt that renewable, homegrown fuels are a key part of our strategy for a clean-energy future.” Obama also said, “I didn’t just discover the merits of biofuels like ethanol when I first hopped on the campaign bus.”

The strongest indication that an ethanol bailout is imminent came last Friday when Agriculture Secretary Tom Vilsack (former governor of Iowa, the nation’s biggest ethanol-producing state) said, “I’m very confident that we’re going to see an increase in the blend rate.”

The heart of the problem: overbuilt ethanol refining capacity. Thanks to generous “blender’s credits,” ethanol refining capacity has more than tripled over the last five years. With 13b gallons of built-up capacity, over 1b gallons of capacity are standing idle… even as another 1.4b gallons of capacity are being built.  According to the Earth Policy Institute, the ethanol industry used about a quarter of America’s domestically-produced grain last year, or “enough to feed 330 million people for one year at average world consumption levels.” Meanwhile, the “blend wall” doesn’t even reach 12b gallons until next year, meaning overcapacity is here to stay. Unless a bailout comes along.

And that, says Bryce, is exactly what’s about to happen. Because ethanol is a purely political project, the symbolism of the oil spill is not being left under-leveraged.According to the president of the Renewable Fuels Association:

The Gulf of Mexico disaster serves as a stark and unfortunate reminder of the need for domestically-produced renewable biofuels.

Even though the previous champion of Gulf of Mexico environmental destruction was… wait for it… the ethanol industry! But, as Rahm Emmanuel is so fond of saying, a crisis is a terrible thing to waste. Don’t be surprised if ethanol takes full advantage of this one.

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22 Comments on “Will The BP Oil Spill Lead To More Ethanol Subsidies?...”


  • avatar
    BMWfan

    Who do I sue when my fuel system is damaged? The Republicans are bad, but NoBama is just unbelievable.

  • avatar
    JimC

    “I didn’t just discover the merits of biofuels like ethanol…”

    When he (or anyone else for that matter) discovers the merits of ethanol I would dearly love to learn the details.

    • 0 avatar
      Robert Schwartz

      Drop by my place and I will demonstrate the merits of ethanol when properly refined and aged in oak barrels.

    • 0 avatar
      SVX pearlie

      Given that we’d actually be doing the environment and world a favor by just selling the corn and drilling more oil, it’s hard to imagine how corn-based ethanol has any merit whatsoever.

  • avatar
    john.fritz

    Biofuels are a ‘stark and unfortunate reminder’ of what happens when the men with guns force a bad idea on the American people.

  • avatar
    Daanii2

    People forget that agricultural subsidies have been put in place around the world for a hundred years. They enrich a few at the expense of the many. The people supposedly helped by them — small farmers — are not helped. Yet they persist.

    It’s disgusting to see this continue, and escalate. Bob Dole was one of the early ethanol backers. Now you see people like Wesley Clark involved. It’s just political whoring.

  • avatar
    Robert Schwartz

    Well that sounds like a win win plan.

    Stop off-shore oil production so we can throw 300,000 people out of work and increase Kind Abdullah’ cash flow.

    Increase ethanol subsidies so farmers in the Midwest plow up more ground and use more fertilizers and chemicals so that more pollution is dumped into the Gulf while the bankrupt US government writes bigger subsidy checks to produce a fuel that wrecks our cars and gets crummy mileage.

    The country is in the very best of hands.

  • avatar
    newcarscostalot

    Here are two articles that present an opposite viewpoint that some find interesting:

    http://www.renewableenergyworld.com/rea/news/article/2005/11/setting-the-record-straight-on-ethanol-38601

    http://seekingalpha.com/article/29035-ethanol-a-few-myths-debunked

    • 0 avatar
      MU78

      Since both articles rely on debunking myths by saying they are false without supporting studies, there is one easy way to determine what they are saying is true.

      If ethanol is such a great idea, how much would be produced without mandates, subsidies and import protections? How many people would put their own money at risk if the government takes away the subsidies?

    • 0 avatar
      newcarscostalot

      As I stated, some people ‘may’ find the articles interesting. Whether you agree or not is your choice.

  • avatar
    Robbie

    As we all know, two wrongs make a right; so more ethanol subsidies can be expected…

    The ethanol subsidies are just agriculture subsidies for the politically powerful agriculture lobby.

  • avatar
    newcarscostalot

    oops! What I wanted to say above was that some folks ‘may’ find the articles I linked to interesting.

  • avatar
    Rod Panhard

    Well, uh, I don’t know how to say this, other than my motorcycle gets 43 mpg on gasoline that’s “fortified” with alcohol at 10 percent. And it gets about 47 mpg on pure gasoline. Any questions?

    • 0 avatar
      MU78

      Join the crowd. My Ninja got 47 mpg with an ethanol blend and 52 mpg with straight gasoline.

      But I’m sure people will tell us ethanol is what we need to fuel the future and lower mpg is a price we have to pay.

  • avatar
    Adamatari

    Corn ethanol is the problem. It’s incredibly inefficient at best (in fairyland) and at worst a net energy loss (here in reality).

    Ethanol itself is not great, but in contrast to the worst oil spill in US history, and one of the biggest EVER? One that will probably severely damage the economies of at least 4 states (Louisiana, Mississippi, Alabama, and Florida)?

    Ethanol may not be the best option, but something must be found to replace oil fuels for the future, no matter what you believe. There are literally billions of people waiting to burn up the remaining accessible oil reserves (as well as the less accessible ones), the cost will only go up, and even putting aside the shocking and obvious environmental effects it creates global instability by funneling money into nasty governments and nasty causes (Wahhabi Islam, Sudan’s dictatorship, etc).

    If we made all our gasoline from chicken guts, I would say to hell with ethanol. Unfortunately, we don’t. We MUST plan for the future, and ethanol is one possible fuel in that future.

  • avatar
    newcarscostalot

    Ethanol will not work as long as the majority of cars are not capable of running ethanol. Also, there needs to be production to match current and future consumption. Finally, what about other items that use petroleum? There are all kinds of products that use petroleum products. Ignoring the type of product involved for a moment, it would be interesting to see what segments of the market that use petroleum have companies that are actively promoting alternatives and whether these companies get subsidies.

    • 0 avatar
      geozinger

      “Ethanol will not work as long as the majority of cars are not capable of running ethanol.”

      (I had to edit this, I left off a whole thought!) If you’re speaking of 100% ethanol, correct. Of course there are the “flex fuel” cars that can run E85. If you’re speaking of any amount of ethanol, not entirely true. Since the widespread adoption of fuel injection (particularly port fuel injection) in the mid 80′s, plus the mandate back in the early ’90′s to use ethanol as an environmentally friendly replacement for MTBE, most cars can deal with concentrations up to about 10% ethanol.

      “Also, there needs to be production to match current and future consumption.”

      In 2008, GW Bush signed legislation to force fuel providers to use more ethanol in their products into the future, and gave financial incentives for ethanol providers to match the upcoming predicted need. (I’m going strictly from memory here, as I am at work and really shouldn’t be posting. It’s a slow Monday)

      “Finally, what about other items that use petroleum? There are all kinds of products that use petroleum products.”

      I have noticed many food packaging companies using plant-based (corn-starch) materials for things like potato chip bags, etc., and a couple of other examples. One of which was Ford’s announcement about using soybean oil to produce a substitute type of foam for the petroleum based foam used in car seats.

      But I really haven’t noticed a large scale effort by other types of businesses to point out their alternatives to using virgin petroleum sources. I’m sure they exist, but it’s not being actively promoted.

      In the larger sense, the need is for a fuel substitute, as I see it. I would love to see widescale production and consumption of butanol, as it is almost a drop in replacement for gasoline, but the chemistry doesn’t work in favor of butanol.

      Ethanol has a higher octane rating than gasoline or butanol, which would do well on a turbocharged engine. It would bring up the efficiency closer to an atmo motor on gasoline. It seems to me the newer generation of cars being released with small turbocharged engines may be good candidates for a more ethanol-rich environment which is coming to the US.

    • 0 avatar
      newcarscostalot

      Cool comment! And I have had slow Mondays. I also didn’t know about the alternative products you mentioned. Thnx!

  • avatar
    Gardiner Westbound

    The government subsidized and protected Canadian ethanol industry has already cranked up its propaganda machine.

    http://www.theglobeandmail.com/globe-drive/green-driving/news-and-notes/is-ethanol-a-scam/article1599406/

  • avatar
    shaker

    If the present ethanol model is cranked up, we’ll deplete our Midwest aquifer and starve ourselves (and the world) to “burn” a fuel that our cars (at best) will burn very inefficiently.

    Mr. Obama; listen to reason – find another way.

  • avatar
    50merc

    Remember it’s this administration’s motto: “Never let a crisis go to waste.”

    Oh, and Adamatari: even if the feds demand 20% alcohol in gas, there will still be oil wells.

  • avatar
    Rada

    Oil subsidies far exceed ethanol subsidies.


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