March 20, 2007

The dark side of Ethanol Fuel

It seems that a number of people are spitting out the Kool Aid regarding the use of Ethanol as fuel for internal combustion engines. Although it is possible, there are a lot of other factors that need to be considered and have been glossed over by the enviros and the US government (which heavily subsidizes Ethanol). From Businessweek comes this good article:
Ethanol's Growing List of Enemies
As demand for the alternative fuel drives corn prices up, an unlikely assortment of groups are uniting with the hopes of cutting government support.

Paul Hitch has spent his entire life raising cattle and hogs on a stretch of the Oklahoma panhandle he says is "flat as a billiard table." His great-grandfather started the ranch in 1884, before Oklahoma was a state, and now Hitch, 63, is preparing to pass the family business on to his two sons.

But he worries that they'll face mounting pressures in the industry, particularly because of the soaring price for corn, which the business depends on to feed the livestock. In the past year, corn prices have doubled as demand from ethanol producers has surged.

"This ethanol binge is insane," says Hitch, who's president-elect of the National Cattlemen's Beef Assn. "This talk about energy independence and wrapping yourself in the flag and singing God Bless America—all that's going to come at a severe cost to another part of the economy."

The ethanol movement is sprouting a vocal crop of critics. While politicians including President George W. Bush and farmers across the Midwest hope that the U.S. can win its energy independence by turning corn into fuel, Hitch and an unlikely assortment of allies are raising their voices in opposition. The effort is uniting ranchers and environmentalists, hog farmers and hippies, solar-power idealists and free-market pragmatists.
And some of their reasons:
More corn for ethanol producers, of course, means less for livestock. Ranchers in wide-open Western states and pig farmers in the rural stretches of the South and Midwest are finding their businesses slammed by policies cooked up in Washington.

Hitch says the feedstock that's primarily made from corn is the single biggest expense for his business. As corn costs have doubled, meat packers and processors like Tyson Foods and Smithfield Foods have to pay more for the animals they buy.
Economists argue that making ethanol from corn wouldn't make any sense without the government's help. The mix of federal and state subsidies to corn ethanol amounted to a conservative estimate of $5 billion to $7 billion in 2006, says Koplow of Earth Track. A considerable chunk of that money comes from the 51¢ tax refund for each gallon of ethanol refiners blend with gasoline to make fuels that can power flexible-fuel cars.

At the same time, the government imposes a 54¢-per-gallon tariff on ethanol from Brazil, which is a cheaper and more energy-efficient product made from sugar cane. Some economists say American politicians are subordinating smart energy policy for political support in key states like Iowa.
If the government is going to play a role in energy markets, there are other players who would like more attention. Supporters of solar and wind energy make the case that if the government is going to hand out subsidies and mandate use, in the name of energy independence, they should get the same kind of treatment as ethanol.

"Why are we supporting ethanol with a mandate, but not wind and solar?" says Randy Swisher, executive director of the American Wind Energy Assn. "There's a lack of consistency in policy."
I'm just excerpting a much longer article -- good insight into bad policy. Posted by DaveH at March 20, 2007 7:39 PM
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