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No One Wants Corn Ethanol…Not Even the Ethanol Lobby


American fuel producers are being forced to blend more and more ethanol into our nation’s gasoline to meet requirements set by the 2007 Renewable Fuel Standard (RFS). Most of this ethanol is produced from corn, a biofuel that isn’t green, starves the world’s poor, and potentially fuels riots. But there’s an even bigger problem with the ethanol mandate. Demand for gasoline is stagnating, and there’s no way to use—or even produce, for that matter—the amount of ethanol required by the RFS this year. The Financial Times reports:

World biofuel production is stagnating….In the US, which produces 60 per cent of the world’s ethanol, optimistic mandates emanating from Washington are crashing into a post-financial crisis reality of weak petrol demand and emptier roads.

The ethanol lobby is just about the last stakeholder still supporting this biofuel boondoggle, but as the FT reports, even they can see that it’s time for reform (h/t Smarter Fuel Future):

The US ethanol lobby has asked Washington to put the brakes on government biofuels targets, in an acknowledgment of a widening gap between policy goals and reality at petrol stations….

This was the first time the association recommended cutting the total renewable fuel mandate, the association confirmed. “We’re trying to be reasonable,” Bob Dinneen, president, told the Financial Times.

If you’re keeping score at home, that means that we’ve nearly reached a unanimous consensus that the ethanol mandate is in dire need of reform. As it happens, a bill was introduced in Congress last week to do just that. Let’s hope it wends its way quickly through the legislative maze.

[Corn image courtesy of Shutterstock]

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  • Marty Keller

    Well, we are in the midst of a fifty-year trend towards rent-seeking as the norm. Until we voters awaken to the fact that this dirty little game is in our interest neither as individuals nor as a nation, the special interests it has spawned will continue to loot the public treasuries.

  • cubanbob

    A better idea is to scrap this green idiocy.

  • ChuckFinley

    Making corn into ethanol does not starve the world’s poor. It does lead to riots because the kleptocratic governments in many third world countries have purchased civic peace in the cities by subsidizing food prices with the food they got, essentially for free, from the US and EU farm subsidy surpluses.

    Now that farmers in those countries are no longer competing with free food, local agricultural production is up almost everywhere. The people in the cities are not happy about having to pay higher food prices and they are concentrated together so they riot. When the local farmers were the ones being screwed by the subsidies, they were too dispersed to riot.

    The other big thing that is happening is that hundreds of millions of Chinese are now prosperous enough to eat meat regularly and Chinese pig farmers can outbid poor people in failed third world kleptocracies on the international grain markets.

    • right_wing_bob

      So Chinese farmers creating a larger demand on supply is contributing to the problem but the vast demand by the ethanol industry is not? I’m more willing to accept your first point but even that seems to be arguing that an extra degree of separation removes cause and affect altogether.

      • ChuckFinley

        US production of corn is up more than US consumption of corn for ethanol. If it were not for increased purchases by Chinese pig farmers, there would be more US corn on the world grain markets than there was before the ethanol fuel mandates.

        What there would not be would be free corn given away as part of the farm price support program which is pretty much moribund as the market price of corn is now significantly higher than the support price.

        If you believe that the US taxpayers have an obligation to supply free grain to people in third world countries who hate us, please state that explicitly.

        • right_wing_bob

          I’m not sure why you felt the need to introduce the straw man argument with implying I am arguing for us supplying third world countries for free. I implied no such thing. Perhaps because your “facts” done pan out. I checked the corn figures and in 2003 we produced about 256 M MT and 2012 was 273 M MT. Since we put around a third into ethanol you claim of increasing production filling the gap isn’t even close. The argument also assume this happened in a vacuum. The population went up about 23 million people in that time period so that increase was probably needed to match the direct and indirect (livestock) demand for food. Try again.

          • ChuckFinley

            Well, you are right about the most recent numbers. Several years ago the US was producing a lot more corn but corn production has dropped off substantially in the last four years. I don’t know if that is due to market forces reducing demand or if it is due to weather or other physical factors reducing production.

  • Ken Watson

    Why does everything have to be ‘reformed’? Plenty of things just need to be unmade, like Prohibition. Down with Ethanol Inc! If it can move, as a fuel, away from nitro-burning funny cars and into the Chevette, let it do so on its own merits. Compelling commerce is NOT within the Constitution. All New Deal jurisprudence on these matters was made with a gun to the Supreme Court’s head. Strike it all down. American Socialism has had its chance. Time for the shackles to be clapped back on Leviathan.

    • Jamie Horgan

      You’ll be happy to know that the same Representative that sponsored the bill introduced last week to reform the RFS also introduced a bill to repeal it. But the reform bill is more likely to pass; Rep. Goodlatte introduced a similar repeal bill in 2011 that never made it out of committee.

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