TeeJaw Blog

Corn Ethanol — Who Pays and Who Benefits?

Posted in Government and Politics by TeeJaw on Sunday, October 9, 2011, 10: 44 AM

Back on June 25th, Will The Ethanol Boondoggle Ever end?, I said this:

“Ethanol is not good for anything. To say it does more harm than good is wrong because it does only harm without any good whatsoever.

“Liberals who claim to care for the poor people of the world might note how the artificial demand for corn that will remain because of the ethanol mandate will keep food prices artificially high around the world. The impact of that falls mainly on people in impoverished regions eking out a subsistence living. That includes beef, a source of protein for humans, because corn is food for cattle.

“Ethanol is a defective product in and of itself. Its claimed environmental benefits are highly suspect, not only because it’s 35 percent less energy-efficient than gasoline. Its proponents have little credibility for themselves or their claims because they are also on record as favoring high European style gasoline prices. Ethanol is a convenient subterfuge for that agenda. Ethanol corrodes pipelines and storage tanks. It’s harmful to engines. Small two-cycle carbureted engines in chain saws and grass trimmers literally choke on it. For those engines you are allowed to buy ethanol free gasoline that is sold in cans for about $9 a pint. To my knowledge there is no way to get ethanol free gasoline to use in 4-cycle lawnmower engines which really need it because their engines also run on carburetors. [since writing this I’ve found ethanol free fuel for both 2-cycle and 4-cycle engines from TruFuel for $32.95 for 6 quarts].

“Many will attribute the ethanol boondoggle to well-intentioned government meddling resulting in costly, damaging, unintended consequences. I don’t buy the well-intentioned part. Even if you do, good intentions don’t matter when the results are awful and plain to see.”

In this book from the Hoover Institution the author details the sordid history and the wildly speculative promises made about federal corn ethanol policy. The contrast with the truth about those policies may not shock you if you’ve ever thought much about it. Ethanol policy in America is a demonstration of the costly mess that is made when government tries to outsmart the free market. The book is based on an in-depth, fact-based evaluation of each of the major claims made by the advocates of the policy. After providing a detailed history of the policy from 1977 to the present, the book examines in detail each of the claims made for ethanol by its advocates and find all to be false, with one exception. Ethanol does indeed create jobs in rural areas of the ten largest corn-producing states in the Midwest, but these jobs come at a very high cost to the rest of us. These jobs also have not been proven to represent any net increase in total jobs in the area that would exist without ethanol since it cannot be known what or how much innovation in other areas has been driven out by the massive government stimulation of ethanol production.

The biggest and most false claim for ethanol was that it would reduce America’s dependence on foreign oil. It has not nor could it have ever done that. There is an obvious and easy way to reduce our dependence on foreign oil and that is to allow the free market in oil and gas drilling and refining to operate again. Since no politician can claim credit for the good things that would be brought to us by a free market, that’s probably not going to happen.

Both Democrats and Republicans are involved in the ethanol scam. George W. Bush is directly responsible for the increase in the ethanol mandate from 7.5 Billion gallons annually to 15 Billion gallons, by his push for it resulting in the 2007 ethanol act. The 45 cents a gallon subsidy costs American taxpayers $6 Billion annually.

The central conclusion of the book is that ethanol is in reality a gigantic wealth transfer program disguised as an energy policy.

The book is available as a Kindle book for $8.00, or a little over 13 bucks in hardcover and, until the Amazon sell-out on sales taxes takes effect, tax free. At least you won’t have to pay anything to the ethanol tycoons if you buy the book now. I’m not an Amazon affiliate so I don’t get one cent if you buy the book. That’s fine with me.


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