TeeJaw Blog

As The Ball Fell In Times Square The Ethanol Subsidy Died A Well-Deserved Death

Posted in Government and Politics by TeeJaw on Monday, January 2, 2012, 10: 36 PM

Congress adjourned this month without extending the $6 billion annual tax subsidy for blending corn ethanol into gasoline and the steep import tariffs on the industry’s foreign competitors. 

Good.

I can’t figure out whether the ethanol mandate also died.  If not, it’s going to be weird to have a mandate that ethanol be blended into gasoline but no subsidy because the stuff wasn’t very economical to make even with the subsidy.  While ethanol plants were going bankrupt more and more ethanol was being produced, so much that the U.S. was actually exporting the stuff.  When government runs something these sorts of anomalies are to be expected. I would think that without the subsidy production will dry up, but if the government is still forcing it to be blended into gasoline it’s going to get interesting,  Gasoline shortages because refineries aren’t allowed to produced gasoline that doesn’t contain ethanol, but there is no ethanol?

This one can’t be blamed on Obama.  We have George W. Bush to thank for the ethanol boondoggle.

You can get gasoline for your small engines that does not contain ethanol.  Check this out.

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.

Quote of the Day…Er, Make That “Night”

Posted in Government and Politics by TeeJaw on Monday, August 1, 2011, 11: 17 PM

Congressman Mike Doyle, DEMOCRAT from Pennsylvania:

“We have negotiated with terrorists. [referring to the Tea Party I suppose] This small group of terrorists have made it impossible to spend any money.”

Hey, you dimwit! The Federal Government is spending $3.8 Trillion this fiscal year alone!  At least $1.7 Trillion of that is the annual deficit!  The government is spending money we don’t have!  On stupid stuff like the ethanol subsidy! On cowboy poetry in Nevada! On a train to nowhere in Milwaukee!

Are you nuts?

This guy’s not just out of touch, he’s mental.

Tea Partiers are not terrorists.  But I guess they do strike terror in the hearts of big-spending whack-job left-wing nuts like Mike Doyle.

Will The Ethanol Boondoggle Ever End?

Posted in Government and Politics by TeeJaw on Saturday, June 25, 2011, 8: 07 AM

You know there was a strong bipartisan vote in the Senate recently to end the ethanol subsidy. That’s a good thing and many think it signals the end of the ethanol boondoggle. Not so fast. Too many of the senators who voted to end the subsidy were quick to point out that the Federal mandate requiring ethanol to be blended into all gasoline sold at the pump will continue, no matter what.

If the government stops paying the annual $6 Billion subsidy that creates the artificial market for ethanol, but continues to force consumers to buy ethanol, what do you suppose will happen? Won’t Iowa farmers will still be selling corn to ethanol plants and won’t those plants will still be selling ethanol to gasoline refiners? Yes, because if the mandate is not abolished the government will continue to require refiners to blend billions of gallons of ethanol into gasoline every year. The only change is that the government won’t be paying for the ethanol any more.

Ending the subsidy and keeping the mandate will merely change who pays for the ethanol. Actually, that’s not right. It’s not “who” pays but “how” we pay. We already pay for the ethanol subsidy through taxes. When the government ends the subsidy consumers will pay it in the form of increased prices at the gas pump. It still won’t be a free market. If a free market for ethanol were ever allowed to exist ethanol would disappear overnight.

It’s even worse. Our taxes are not going to be reduced by the $6 Billion savings to the government from eliminating the subsidy. So when price of gasoline at the pump goes up enough to pay for the ethanol in the gas, consumers will effectively be paying for it twice. They’ll still be paying the same taxes along with the higher price at the pump. That’s the inescapable result from eliminating the subsidy and keeping the mandate.

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. [If you try putting the pre-mixed oil and gasoline fuel sold for chain saws in your 4-cycle lawnmower engine the mistake will become quickly apparent and will damage the engine]

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.

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