E85 Boondoggle Of The Day: Undersupply

by Edward Niedermeyer

July 29th, 2008 2:25 PM

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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ZoomZoom on Jul 30, 2008
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.

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AJ on Jul 30, 2008
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

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on Jul 30, 2008
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

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Pch101 on Jul 30, 2008
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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