walter russell mead peter berger lilia shevtsova adam garfinkle andrew a. michta
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Death of an Ethanol Plant

Corn

EPA mandates have been propping up the corn ethanol industry for nearly six years now. But as the industry struggles in the face of political opposition, weak demand and the after-effects of last year’s drought, ethanol plants are going bankrupt. Workers at one ethanol plant in South Bend, Indiana, hoped an investor would save them from liquidation by buying a plant at auction and restarting ethanol production. As the WSJ reports, those hopes went unfulfilled:

[T]he winning $2.5 million bid at the bankruptcy auction came from buyers who plan to sell the plant for scrap.

The South Bend facility was the country’s first major ethanol plant when it opened in 1984, and now it could be the first to get dismantled after filing for bankruptcy. […]

[S]truggling plants, especially ones that are older and located further from the corn crop, [might also close,] industry analysts said.

With all due respect to the workers, who are out of a job through no fault of their own, this could be seen as a sign of progress. The federal mandates that have been keeping the ethanol industry going have been a miserable failure. The demand for corn ethanol isn’t there, and even if it were, the supply can’t keep up with the quotas. The struggles of these ethanol plants should serve as a wake-up call to Congress that our ethanol programs aren’t working.

We don’t want to gloat about the jobs this town has lost; our sympathies go out to the 90 workers and their families, who now face the difficult prospect of finding work in an anemic economy. Fortunately, thanks to the energy revolution, there are all kinds of well-paying conventional energy jobs opening up elsewhere in the Midwest. So, for young people looking to get into the energy industry, we would suggest staying away from ethanol. Shale oil and gas have a much brighter future.

[Corn image courtesy of Shutterstock]

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  • http://foobarista.blogspot.com foobarista

    The WSJ article also mentions another government “feature”: a $33M loan from the DOE that will probably not be repaid. More glorious “investments” from the people who brought you Solyndra.

  • http://www.facebook.com/corlyss.drinkard Corlyss Drinkard

    “[T]he winning $2.5 million bid at the bankruptcy auction came from buyers who plan to sell the plant for scrap.”
    Great idea! I wonder what EPA would bring on the scrap market?

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