Previous readers will know I’m not much of an ethanol supporter. The characteristics of the 2-carbon ethanol are just to weak to be a first a choice. Being corrosive, and having a rather low energy density short-circuit the prospects of really large adoption. The idea in political circles to look into the feasibility of special pipelines for ethanol just puts a larger drag on ethanol’s success. With butyl alcohol and synthetic fuels in development ethanol will likely see the opposition gain strength.

Just 14 moths ago the U.S. ethanol feed stock, corn, was less than half the price of today and the U.S. Department of Agriculture was spending billions to subsidize the production that sold way under the cost to grow and deliver. Now with ethanol production pushing the demand high enough those prices get the U.S. taxpayer off the hook for subsidizing growing corn.

But the howls of agony from critics who lost their subsidized corn purchases gets louder and shriller by the day. The Organization of Economic Cooperation and Development, a political animal, concluded that biofuels “offer a cure (from depending on oil) that is worse than the disease.” The National Academy of Science thinks ethanol production will make fresh water scarcer. The American Lung Association has found a new kind of air pollution from ethanol use and cartoonists blame ethanol for running up the price of food for the poor. I was surprised (Well, maybe not.) that the United Nations has an outside expert on the “right to food.” Who of course says, using land to grow biofuels a “crime against humanity.”

Yet many U.S. farmers, the long line of suppliers, the towns small and large, plus the ethanol industry are all committed from decades of working to get the U.S. fuel consumer as a customer. And after one good year, just one, mind you, the business has hit the rocks.

Naturally the ethanol industry has its lobbyist working on Congress. The items on the list include increasing the total amount of gasoline with ethanol added, keeping the 51 cents per gallon excise tax credit that goes to the gasoline blenders, and keeping the protective 54-cent per gallon tariff on imported ethanol. Now the price per gallon of ethanol is down from June 2006 pricing near $5 a gallon sliding all the way down to $1.85. With gasoline blenders on the record using ethanol to stretch out gasoline, or meet state mandates for cleaner burning fuel, they know ethanol offers a huge value. U.S. gasoline consumers have a big friend in ethanol.

But the supply burst out into a near glut. U.S. production has increased 80% in just 2 years to half of the global production of nearly 14 billion gallons. While the ethanol share of the U.S. gasoline equals less than 4%, the major problem is that not all gasoline blenders include ethanol and actually resist its use.

The opposition includes a few of the mentioned gasoline blenders, and other formidable groups such as livestock producers, packaged food processors, and part of the oil industry.

The livestock growers and the packaged food processors deeply miss their taxpayer funded subsidized prices for the corn. Part of the oil industry bemoans the new “competition” and just resist in the face of the advantage to them and their consumers. The complaints, real and really just positions inside claims about water and fertilizer from environmentalists who loved ethanol just a few short years ago are blowing out the a flame that gave so many the warm and fussy happy feeling about biofuels.

The hard fact has come home to everyone now. Ethanol is a fuel with all the pluses and minuses of any choice to have a high-density portable source of energy. Even as it offered a quick and safe alternative to the banned gasoline additive methyl tertiary-butyl ether getting to a full 10% of gasoline content has proven elusive.

So the lobbyist game is on in earnest. The livestock meat and poultry folks have grouped with the oil industry. The packaged food crowd has turned up the heat in a big way with Dean Foods, Heinz (John Kerry’s wife’s company) Nestle, PepsiCo and CocaCola coordinated a letter to senators alleging that greater use of ethanol would affect their ability to produce competitive foods. Whoa, now what wholesome healthy foods are they making, cholesterol-laden sausages, ketchup, pickles, chocolate and soda, or pop or however it’s called near you?

Not to miss a chance to groom their influence, Mexico blames ethanol for rising prices for corn meal based tortillas, China has barred new biofuels plants from using corn, Cuba’s infamous Fidel Castro says using foods crops for fuel is a “sinister idea,” and Venezuela’s nut Chavez says corn is to be used for food not fuel. All are great friends to America and her citizens?

Now for the shock . . . U.S. lawmakers appear to have become receptive to these anti-ethanol positions. Or it’s not a shock, depending on your view of Congress.

But the main goal is lost in the shrill screaming from losing the subsidized corn. Ethanol, used at 10% of a gallon of U.S. gasoline has a dramatic affect on everyone. The corn farmers are off welfare and making an honest buck. The ethanol industry has grown enormously; to the point a shake out is taking place putting the most efficient operations ahead. Other customers who use corn products are mostly processed food companies who in truth are making foods ready made, that are of dubious value if not in some cases actually harmful when eaten over time or soft drink manufacturers whose product while delightful is sweetened with chemical made from corn. The only honest complaint comes from the livestock producers who do have to cope with a corn price based in market where another consumer gets an advantage.

In the big view, with all the drawbacks of ethanol in mind it still does a good thing. The price of oil has a small but valid competitor. That’s a start. Lets just hope that technology and public policy can keep it going until other alternatives can get some traction.


2 Comments so far

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