Subsides for corn ethanol

rob · #1 (**permalink**) 04-16-2008, 05:59 PM

Subsidies for corn ethanol

Corn ethanol subsidies totaled $7.0 billion in 2006 for 4.9 billion gallons of ethanol. That's $1.45 per gallon of ethanol (and $2.21 per gal of gas replaced).
Even with high gas prices in 2006, producing a gallon of ethanol cost 38¢ more than making gasoline with the same energy, so ethanol did need part of that subsidy. But what about the other $1.12. Not needed! So all of that became, $5.4 billion windfall of profits paid to real farmers, corporate farmers, and ethanol makers like multinational ADM. Why is it the farm states put up with this?!

Where did those subsidies come from:
1. 51¢ per gallon federal blenders credit for $2.5 billion = your tax dollars.
2. $0.9 billion in corn subsidies for ethanol corn = your tax dollars.
3. $3.6 billion extra paid at the pump.

That's quite a bit when you figure it only made us 1.1% more energy independent and only reduced US greenhouse gases by 1/19 of 1%.

Complete analysis of corn-ethanol subsidies:
Direct Subsidies ♦ Price premiums ♦ Social cost & windfall profits

Who should get the subsidy?
In 2006 ethanol blenders were handed $2,500 million in subsidies while the Department of Energy awarded $385 million spread over four to six years to help build cellulose ethanol plants. That's about 32 times less per year. But celluse gets a bit of subsidy from the USDA. Altogether it may get 10% as much as corn-ethanol. The problem is the lobby for cellulose is much weaker than the corn-ethanol lobby.
Corn ethanol does not need subsidies. Cellulose ethanol research does--it would actually do some good. But's what's needed is research, and very small-scale plants, not the big ones that are being built on pretense.

Oil get's big subsidies, not ethanol. Wrong by 54 times!
"Ethanol Today," (8/'05) states "Five years ago, a US General Accounting Office report showed that ethanol had received $11.6 billion in tax incentives since 1968, while the oil industry had received over $150 billion in tax benefit over the same period.
Probably true. But the oil industry produced 1068 times more energy so the subsidy rate per unit energy was 54 times higher for ethanol. That's like ethanol gets 54¢ and oil gets 1¢. Now if we had oil subsidies, and we do, and ADM is making more profit than ...

Ethanol Subsidies, State and Federal

bluedog · #2 (**permalink**) 04-16-2008, 07:13 PM

We indeed are sitting on the answer to our energy needs if it were but allowed to be exploited. Being from the state that I am, I naturally am an avid supporter of coal because it is the livelihood of our state economic structure. But, this does not do away with the fact that we have centuries worth of coal reserves around this nation, and when properly managed in the extraction process there is no environmental harm. At this current time the nations electrical energy is provided by over 50% in contributions from this coal reserve. Why not invest more into this energy source and let the environment concerns be offset my mass producing total electric transportation in the automotive industry? The technology is here already to mass produce all electric vehicles which have a range of 100 miles before needing a recharge, with speeds that reach the 60 to 70 mph range, with all the comforts of AC, etc of internal combustion autos. This indeed would more than meet our local transportation concerns, and if major journeys were required one could always have a gas/electric hybrid on standby.

As stated the environmental concerns would be minimal due to the fact of reduced carbon emissions by the automobile industry at large. A very few years of letting the mass producers of oil drown in their own oil would indeed bring down the artificially priced crude, to a more reasonable price. And put the US on the right course to research more efficient energy. As I said, we have more than 2 centuries of coal reserves, surely within a few decades a solution would be forthcoming, and we would be well away from our total dependency upon purchasing crude from less than reliable sources. BD

coyote · #3 (**permalink**) 04-21-2008, 04:17 PM

Advocates of energy independence cite Brazil as an example when calling for increased ethanol production mandates in the United States, but they often misrepresent or misunderstand the facts concerning Brazil\'s energy make-up, says D. Sean Shurtleff, a graduate student fellow with the National Center for Policy Analysis.

In August 2006, the Washington Post reported that ethanol in Brazil "has replaced about 40 percent of the country\'s gasoline consumption," a figure commonly cited by newspaper outlets. But this is misleading, as Energy Information Administration (EIA) data show:

In 2006, ethanol made up about 48 percent of the fuel used by gasoline-powered passenger vehicles in Brazil.
But including both gasoline-and-diesel-powered vehicles, ethanol supplied only 20 percent of the total fuel consumed by automobiles and trucks on Brazilian highways.

After the 1980s\' ethanol shortages, Brazil recognized that ethanol production alone would not lead to energy independence. Instead, it started promoting policies to boost domestic oil production. Indeed, increased production and new oil discoveries played the biggest role in liberating Brazil from dependence on foreign energy sources. According to the EIA:

Brazil increased domestic crude oil production an average of more than 9 percent a year from 1980 to 2005, to 1.6 million barrels of oil per day.
Most notably, in 2007, Brazil announced a huge oil discovery off its coast that could increase its 14.4 billion barrels of oil reserves by 5 billion to 8 billion barrels, or 40 percent.

By contrast, from 1980 to 2005, U.S. crude oil production fell an average of about 2 percent a year or 40 percent overall, from 8.6 million barrels of oil per day to 5.2 million.