Corporate Welfare

Gasbags for Ethanol


"There is no ethanol 'market,'" Jay Hancock writes in today's Baltimore Sun. "The ethanol business is driven by government planners, not freely acting buyers and sellers." Those subsidies, he adds, aren't likely to end anytime soon:

It's impossible to find a politician who opposes ethanol welfare. Republican presidential candidate John McCain, who once opposed increased ethanol production, thinks it's a great idea. Democratic candidate Hillary Rodham Clinton, another previous opponent, sees ethanol as a key part of her $50 billion "moon shot" program to cut U.S. addiction to oil from unstable countries.

President Bush signed the 2005 energy bill that requires the United States to consume 7.5 billion gallons of renewable fuel by 2012. Then he raised the bid, calling in his 2007 State of the Union speech to reduce the projected use of gasoline by 20 percent in the next decade, mainly with ethanol. (Ethanol makes up less than 5 percent of gas use now.)

And Congress looks like it will comply, requiring once undreamed-of ethanol consumption even as it maintains the industry's $2 billion annual tax-credit subsidy.

So who cares if existing plants and those under construction will produce 12 billion gallons of ethanol—60 percent more than we'll need even five years from now, under current law?…Who cares that making ethanol may consume as much energy (including fossil fuels) as it produces? Who cares if ethanol competition is dissuading oil companies from building new refineries—a key reason gas costs more than $3 a gallon?

More ethanol fans: Rudy Giuliani, Mitt Romney, John Edwards, Barack Obama…pretty much all the frontrunners, with the possible exception of Fred Thompson. According to the DNC, Thompson "consistently voted against ethanol subsidies" while he was in the Senate. Naturally, the DNC thinks this is a bad thing, but as far as I'm concerned it's the first really positive fact I've heard about the man. Of course, he could always pull a McCain on the issue once he hits the campaign trail.

(The DNC also says that Thompson was one of just 13 senators who voted to establish a school voucher system, to be "paid for by eliminating certain subsidies for ethanol, oil, gas and sugar." I'm against federally funded vouchers, but set that aside—if Thompson is willing to take on the sugar lobby, that's another point in his favor. A point outweighed by his die-hard support for the Iraq war, but a point nonetheless.)

NEXT: Gingrich-Gore '08: For a Snootier America

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  1. A point outweighed by his die-hard support for the Iraq war, but a point nonetheless.

    I don’t know. I think the American People are getting less and less willing to support the war no matter who’s president. I really don’t see us still there in a hundred years. However, if he can break the back of corn and sugar, That would be YUGE

  2. Don’t expect any front-runner to be against ethanol so long as Iowa holds the first caucus. In fact IIRC that was one of the reasons McCain focused on New Hampshire in 2000 and pretty much skipped Iowa–he couldn’t win there and be against ethanol welfare.

  3. The fact that the politicians keeping talking up the wonders of corn based ethanol while supporting continued protectionist tarrifs on imports of cheaper Brazilian ethanol made from sugar cane pretty much tells you all you need to know.

  4. highnumber,

    Well stated. It was all well and good when politicians would buy votes (and get money) with ethanol legislation and subsidies, but it’s another thing altogether when our precious, agave-derived fluids are placed in jeopardy.

    Wow, highnumber, Urkobold has five tequila-related postings already? Huh.

  5. ProGLib has five tequila-related postings at Urkobold. That’s the truly amazing thing.
    Keep up the good work!

  6. Say, you’re right–they’re all me. Somehow seems wrong that you don’t have one.

  7. It would be too much like writing about myself. You know, like batin.
    I’ll tackle it the next time I have a really amazing experience.

  8. Why don’t the cattlemen agitate for a tallow subsidy? That’ll stick it to those Arabs, right?

  9. Robert,

    More tallow means more cows. More cows means fewer trees. Fewer trees means less bourbon. We need an energy resource that does not impinge upon our fundamental imbiberties.

  10. More cows mean more methane. More methane means faster global warming.


  11. Faster global warming means “Al Gore for President.” We need a solution that doesn’t lead to a more bibertarian country.

  12. highnumber,

    I suspect that whatever anthropogenic component there is to the current warming trend is virtually completely due to Mexican farmers burning blue agave crops. Stop that, and not only does the world cool, we also save our vital natural resources.

  13. As long as we have tequila, who really cares about global warming, anyway?

  14. I almost wrote “oops” about the nametag, but I will let that stand.

  15. More cows mean more methane.

    If only we could capture that methane we could burn it in our cars.

    Whoaaa! This is pure federal grant material. I gotta quit wasting time on these tubes and get to work on the proposal.

  16. How does blue agave compare to corn for energy use? Just asking.

  17. Blue agave (in its manufactured form) tends to make my head hurt and sap my energy. Corn (in its manufactured form) tends to make me fat, which saps my energy.

    Energy neutral.


  18. highnumber,

    You know, bourbon is made mostly from corn. Could the agave burning be connected to that? Maybe Big Bourbon is the power to fear? I actually prefer bourbon to tequila, which is troubling.

  19. Let’s not forget beer! As Germany moves towards biofuels, farmers are ditching barley in favor of corn. The result is higher prices for delicious, malty German beer. Do you really want to live in a world where the temperature is constant but the beer is prohibitively expensive? I think the living would envy the dead.

  20. It’s amazing how politicians talk about energy security and reducing our dependence on fossil fuels, while at the same time having protectionist policies in place to protect a less efficient domestic ethanol industry, at the expense of the consumer – who could be paying a lot less for Brazilian ethanol, which is cheaper and more energy efficient than corn-based ethanol. Serves to show that protecting inefficient domestic industries is more important than guaranteeing energy security.

  21. For more information on the deep and wide extent of subsidies and other market interventions supporting biofuels, see our report (published last October), “Biofuels–At What Cost?“.

    Ron Steenblik
    Research Director
    Global Subsidies Initiative

  22. “It’s amazing how politicians talk about energy security and reducing our dependence on fossil fuels”

    Yes especially since energy security is not enhanced by a reduction of dependence on fossil fuels – it’s enhanced by a reduction of dependence on fossil fuels that are sourced from areas of the world outside of our control.

    Energy security would be enhanced by drilling for oil in ANWAR and of the coasts of Florida, California, etc. and more utililization of coal – which we have plenty of.

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