President Obama goes out of his way to Raise the Price of Gasoline

Posted by PITHOCRATES - September 14th, 2013

Week in Review

Why is gasoline so expensive?  Because of President Obama.  He has shut down drilling wherever he can.  Reducing the American supply of oil (and increasing its cost) to refine into gasoline.  And he has been depreciating the dollar with his quantitative easing.  The Federal Reserve’s stimulus that is doing nothing to stimulate the economy.  But because oil is priced in U.S. dollars per barrel this devaluation of the dollar results in higher oil prices.  Because it takes more of a devalued dollar to pay for the same amount of oil those dollars once bought.  And then there’s this (see Valero Asks Obama Administration to Waive Ethanol Mandate by Mario Parker posted 9/10/2013 on Bloomberg).

Valero Energy Corp. (VLO), the world’s largest independent refining company, called on the Obama administration to waive the country’s biofuel target immediately, saying the cost to reach it has skyrocketed…

Refiners are required by law to use 13.8 billion gallons of ethanol in 2013. Renewable Identification Numbers are attached to each gallon of ethanol to track compliance. Once the additive is blended into gasoline, refiners can retain the certificate to show compliance or trade it to another party. RINs prices have risen more than eight-fold so far this year.

RINs have increased because of falling gasoline demand and higher biofuel consumption targets, Klesse said in the letter.

Gasoline demand will drop 0.5 percent next year, according to a forecast today from the Energy Information Administration, the Energy Department’s statistical arm. The Renewable Fuels Standard, set in 2007, calls for 14.4 billion gallons of ethanol to be used in 2014, up 4.3 percent from this year. The target increased 4.5 percent this year from 13.2 billion in 2012…

Ethanol is typically blended in a formula of as much as 10 percent in gasoline. While the EPA has approved blends of 15 percent, refiners haven’t adopted the higher concentration, citing engine damage concerns.

They only blend ethanol with gas so the percentage of ethanol in the gas doesn’t exceed 10-15%.  Because putting more into the gas could damage the engine.  So for every 10 gallons of gasoline they only need one gallon of ethanol.  For if they bought more than one gallon per every 10 gallons of gas they would have more ethanol than they could use.  With a fixed amount of ethanol required (14.4 billion gallons) instead of a percentage these refineries have a problem.  Because they need to buy 600,000 gallons more of ethanol in 2014 (a 4.3% increase over 2013) while gasoline demand will fall 0.5% in 2014.  Because of President Obama’s horrible economy.  Which means they will be blending less ethanol with gasoline in 2014.  Despite having to buy 600,000 gallons more.

They can’t use this extra ethanol.  And they sure don’t want to buy it just so they can store it someplace.  So instead they want to buy these Renewable Identification Numbers (RINs).  That certifies a gallon of ethanol has been blended with gasoline as required.  Even if it has not.  Which becomes a pretty handy thing to have (these RINs).  As you can avoid buying ethanol that you can’t use to meet the new higher requirement.  For people are buying less gas because of President Obama’s horrible economy.

These government regulations are greatly distorting the free market.  Increasing the costs of the refineries.  Who pass it on to the consumer in higher gas prices.  Which hurts Americans because they have to put more of their paycheck into their gas tank instead of using it on food or clothing for their children.  Pulling more money out of the economy.  Which helps to make President Obama’s economy so bad.  So why doesn’t he lower the number of gallons required when the number exceeds the amount the refineries need to blend with gasoline?  Because he doesn’t care about the cost of gasoline.  The higher the better for him as fewer people will be driving.  Which will create a greater demand for mass transportation.  Which will create more union jobs filled by people who will vote Democrat.  Also, the higher the price of gasoline the greater the tax revenue the governments collect at the state and federal level.  Which is what’s really important to governments.  Not food and clothing for children.

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People beg the EPA to Waive their Ethanol Mandate to lower Food Prices but the EPA Refuses

Posted by PITHOCRATES - November 18th, 2012

Week in Review

People suffering from the high price of corn beg the EPA to waive the ethanol mandate.  To use corn for food.  And not for fuel.  To help hungry children in the US.  And around the world.  Whose parents have to pay higher and higher food prices thanks to a reduced corn crop thanks to those droughts this past summer.  The EPA’s response?  Kids are fat enough already and could stand to lose a few pounds.  Figuratively, of course (see EPA rejects request to waive requirements for corn-based ethanol by David Shepardson posted 11/16/2012 on The Detroit News).

The Environmental Protection Agency on Friday rejected a request from eight governors and nearly 200 members of Congress to waive requirements for the use of corn-based ethanol in the nation’s 240 million vehicles in the wake of this summer’s severe drought.

The move is a victory for corn farmers that have seen prices jump by 400 percent in recent years, but a loss for pork and beef producers who have seen the price of feed jump…

The EPA said it has not found evidence to support a finding of severe “economic harm” that would warrant granting a waiver of the Renewable Fuels Standard.

Can you imagine gasoline prices rising 400% and the government saying they see no economic harm in that?  Can you imagine prescriptions prices rising 400% and the government saying they see no economic harm in that?  Can you imagine the cost of health insurance rising 400% and the government saying they see no economic harm in that?  Of course you can’t.  So why do they not see harm in a 400% rise in corn prices?  Could it be because the ethanol lobby supports Democrat candidates and their environmental policies?  And higher corn prices mean more generous campaign donations?  Perhaps.

“We recognize that this year’s drought has created hardship in some sectors of the economy, particularly for livestock producers,” said Gina McCarthy, assistant administrator for EPA’s Office of Air and Radiation. “But our extensive analysis makes clear that congressional requirements for a waiver have not been met and that waiving the RFS will have little, if any, impact…”

In 2011, nearly half the corn grown in the U.S. was diverted to ethanol production to meet the RFS, critics say…

Food producers — including the makers of frozen food and restaurant chains — have criticized the mandates, saying it raises food prices…

The American Coalition for Ethanol praised the decision by the EPA…

The Michigan Farm Bureau had opposed granting the waiver, saying it doesn’t believe keeping the requirements in place “would severely harm the economy of Michigan at this time.” But Michigan poultry and livestock producers are affected by higher corn prices.

The governors of Maryland and Delaware, also home to poultry producers, told the EPA in October that without a waiver they would face “the loss of thousands jobs.” North Carolina, New Mexico, Georgia, Texas, Virginia, Utah and Wyoming also had asked EPA to waive the requirements.

The EPA conducted several economic analyses and concluded that on average waiving the mandate would reduce corn prices by 1 percent. EPA also said waiving the mandate would not affect household energy costs.

The Democrats talked a lot about arithmetic during the 2012 campaign.  Saying that simple arithmetic proved that they should raise tax rates on rich people.  Because collecting another 5% or so from high income earners would help balance the budget.  Even though we have trillion dollar deficits.  And the proposed tax rate hikes would bring in nowhere near a trillion dollars.  So it would appear the Democrats are arithmetically challenged.  Which probably explains why they say doubling the corn crop (by eliminating the methanol mandate) will only lower corn prices by 1%.  When doubling the supply of any other commodity in the world would cause the price to collapse.

These are the same people that place import tariffs on foreign made goods to restrict supplies to keep domestic prices high.  These are the same people that accuse other nations of anti-dumping violations for flooding the market with their goods.  Which lowers domestic prices.  So these people seem to believe that increasing supply will lower prices.   Except when it comes to corn.  Even if you double the size of the corn crop.  Amazing.

Of course, it’s about the money.  The corn and ethanol producers are getting rich.  Who are only getting rich because of their friends in government.  Which is the definition of crony capitalism.  Or corruption.  The government interferes with market forces.  So their friends and supporters can get rich.  And share that wealth with their friends in government.

And while the crony capitalists are getting rich the American consumer gets poorer.  As they pay more for corn, beef, pork, chicken, eggs, milk, cheese, etc.  Families have to cut back on their grocery budgets.  And cut back on going out.  Because they have less disposable income.  And restaurants have to raise their prices because of the increase in their food costs.  But this is okay as far as the EPA is concerned.  As they put big money political contributions ahead of American families.

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Price of Beef and Dairy Goods rise as Midwest Drought leaves less Corn for Food and Ethanol

Posted by PITHOCRATES - September 30th, 2012

Week in Review

The Midwest drought has reduced corn yields.  Greatly raising the price of corn.  Good for famers who have corn to sell.  But not so good for people who buy that corn.  From those who make ethanol.  To those who feed livestock with it.  And the drought also reduced the amount of food available to export to impoverished, hungry nations.  As well as raising food prices in U.S. grocery stores.  From beef to eggs to milk to cheese.  It has hit dairy farms in California especially hard (see Calif dairies going broke due to feed, milk prices by GOSIA WOZNIACKA, Associated Press, posted 9/29/2012 on Yahoo! News).

Across California, the nation’s largest dairy state, dozens of dairy operators large and small have filed for bankruptcy in recent months and many teeter on the edge of insolvency. Others have sold their herds or sent them to slaughter and given up on the business.

Experts say California dairymen face a double whammy: exorbitant feed costs and lower milk prices. The Midwest drought has led to corn and soybean costs increasing by more than 50 percent this summer, stressing dairymen from Wisconsin and Minnesota to Missouri. But in California, milk prices have also lagged behind those in the rest of the nation, exacerbating the crisis.

Not helping those “exorbitant feed costs” is the ethanol mandate that requires us to burn some of this reduced food crop in our cars as fuel.  Which the government has refused to waive.  Despite fervent requests from those who have to cull their herds because they can’t afford to feed them.  But environmentalism wins out over people.  And cows.  More people go hungry because of the cost of food.  And dairy farmers send their cows to slaughter because they can’t afford to feed them.

Save the planet.  Kill the people.  And cows.  Especially when you have to please your environmentalist base when going into the 2012 elections.

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The Drought and Methanol Mandates decimate Corn Crops and High Quality Prime Cuts of Beef

Posted by PITHOCRATES - August 26th, 2012

Week in Review

Restaurants are one of the greatest job creators.  Because there are so many of them.  And if they open for breakfast, lunch and dinner that’s a lot of food servers, chefs, cooks, barkeeps busboys, dish washers, supervisors and managers.  Running a restaurant is hard.  It’s the number one business that fails.  Because margins can be thin.  And the amount of competition great.  But the people who mortgage their homes to open up a restaurant put a lot of people through college.  Gave single parents flexible hours to work around their kids schedules.  And let some people just do what they love.  Work with people.  Create great food.  And provide exceptional service.

This recession has been hard on restaurant owners.  As eating out is one of the first expenses a family cuts in their family budget.  Now things are going to get even harder (see Peter Luger Steak Prices May Soar as Drought Culls Herds by Peter S. Green and Esmé E. Deprez posted 8/21/2012 on Bloomberg).

The worst Midwest drought since 1956 has scorched crops and sent the price of corn, the main ingredient in livestock feed, up 62.8 percent since mid-June. Ranchers are culling herds to avoid feed costs, flooding the market with cheap supplies of beef.

There’s a parallel decline in the quantity of animals that yield the highest-quality prime cuts, which require months of extra feeding. The shift will be felt in steakhouse menus down the road.

So prices will go up and the quality of the meat will go down.  Which raise the prices on their menus.  And drive patrons away.  Because they, too, are facing higher costs in their lives.  And they can’t afford to pay more for less.

The drought prompted President Barack Obama to help farmers with $170 million in government meat purchases.

“We’ve got a lot of freezers,” Obama told a campaign rally in Council Bluffs, Iowa, on Aug. 13. The government is also considering cuts to ethanol mandates after livestock producers complained that too much grain is being diverted to make fuel.

“We’ve got a lot of freezers.”  The government has trillion dollar deficits in all four years of Obama’s presidency and he’s still spending money that he doesn’t have.  Which isn’t very smart.  And will do little.  For how is buying this meat going to solve the problem everyone is having in the food industry?  The high price of feed corn?

Why not just do the easy thing?  The thing that doesn’t increase the debt?  Don’t consider cutting methanol mandates.  Do it.  Cut them all.  Eliminate every last one.  Let gasoline be gasoline.  And food be food.  If we don’t divert 40% of the corn crop to the methanol industry that will nearly double the corn crop.  Now that would make an impact that would go a long way in lowering food prices for every American.  From eggs to chicken to milk to cheese to hamburger to prime cut steaks.  Lower prices for everyone.  And more economic activity.  From the extra money households don’t have to spend on groceries.  So they can go out during the week for dinner and a movie.  Helping all those restaurants.  And all the people who work in them.

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President Obama’s EPA Policies are Causing High Food Prices and Global Hunger

Posted by PITHOCRATES - August 18th, 2012

Week in Review

President Obama says he cares for poor people.  But his actions clearly show that unless there’s something in it for him he doesn’t care for poor people.  Even if they are going hungry (see White House offers drought relief, feels heat to waive ethanol mandate by John W. Schoen, NBC News, posted 8/13/2012 on Economy Watch).

President Barack Obama announced emergency measures Monday to ease the impact of the worst drought in half a century, but stopped short of waiving the government’s requirement that a large portion of the now-shriveled corn crop be diverted to make ethanol…

As the lowest yields in nearly two decades squeeze feed supplies, livestock producers are asking the government to waive a five-year-old requirement that gasoline sold in the U.S. contain roughly 9 percent ethanol. Because most ethanol in the U.S. is made from corn, roughly 40 percent of the corn crop, in a good year, is purchased by the biofuel industry…

With the rest of the world’s food chain already strained, the competition for each kernel of corn is going global. Last week, a United Nations food index jumped 6 percent, and the UN’s Food and Agriculture Organization warned against the kind of export bans, tariffs and buying binges that worsened the price surge four years ago. The U.N. food agency stepped up the pressure on the U.S. to ease its biofuel policies…

Ethanol production had already begun slowing before this summer’s drought, as fuel suppliers have approached the limit of demand for the biofuel. Though higher concentrations are sold in a few stations, most gasoline formulated with ethanol is limited to a 10 percent blend.

Cutting production, though, could produce a bigger political backlash from another key contingency in an election year: American drivers. Since other additives have been phased out over the past five years, gasoline refiners have overhauled their plants and rely on ethanol to produce high-octane fuel that burns cleanly enough to meet air quality standards.

Save the planet.  Kill the people.

You know food prices are rising when the UN is asking the U.S. to ease its biofuel policies.  These are, after all, the same people pushing for economy-destroying environmental policies on the entire world.  Particularly on the advanced economies of the world.  So this food crisis is serious.  Which is why they are urging President Obama to stop using 40% of the corn crop for fuel.  And to use this food as food instead.  To save starving children in the less economically advanced parts of the world.  But President Obama’s answer?  “No.”  Why?  Does he not care for the starving children of the world?  Apparently not.  For he apparently cares more about the campaign donations from the ethanol lobby.

President Obama has shown he has no problem using executive orders to overrule the Constitution.  So he clearly could use his executive powers to change policies he has the legal authority to change.  Such as relaxing his EPA requirements during this hot and dry summer.  Let the cars pollute for a year until this crisis ends.  Then he can re-cripple the economy with his punishing EPA requirements later.  He can do it by executive order.  But he won’t.  Because the ethanol lobby is too well connected.  Besides a lot of his rich Hollywood contributors are all environmentalists who will never have a problem putting food on their tables.  But they will have a problem putting campaign cash on President Obama’s table if he rescinds any environmental policies.  So people will starve.  So the president can please his cash-contributing friends.

Never before has one man caused so much suffering to so many for the benefit of so few.  Well, actually, there have been a lot of people who have done this.  But they were usually warmongering dictators.  Not the leader of the free world.  Which makes this especially sad.  Unlike his republican rival for the presidency this fall, our president clearly takes care of his rich friends while poor people suffer in the United States from high food prices.  And poorer people throughout the world suffer hunger.  Because of President Obama’s EPA policies.  Something that even the UN says are harmful to poor people everywhere.  And is begging the president to stop willfully hurting these people.

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Energy/Environmental Policies requiring Ethanol cause Hunger and Economic Devastation throughout the World

Posted by PITHOCRATES - August 4th, 2012

Week in Review

As if the Great Recession wasn’t bad enough already.  Bad economic policies and bad regulatory policies have already beaten this economy into the ground.  And now the government is going to pile on with bad energy/environmental policies.  Making the American people say “ouch” (see Corn for Food, Not Fuel by COLIN A. CARTER and HENRY I. MILLER posted 7/30/2012 on The New York Times).

…By suspending renewable-fuel standards that were unwise from the start, the Environmental Protection Agency could divert vast amounts of corn from inefficient ethanol production back into the food chain, where market forces and common sense dictate it should go.

The drought has now parched about 60 percent of the contiguous 48 states. As a result, global food prices are rising steeply. Corn futures prices on the Chicago exchange have risen about 60 percent since mid-June, hitting record levels, and other grains such as wheat and soybeans are also sharply higher. Livestock and dairy product prices will inevitably follow.

More than one-third of our corn crop is used to feed livestock. Another 13 percent is exported, much of it to feed livestock as well. Another 40 percent is used to produce ethanol. The remainder goes toward food and beverage production.

Previous droughts in the Midwest (most recently in 1988) also resulted in higher food prices, but misguided energy policies are magnifying the effects of the current one. Federal renewable-fuel standards require the blending of 13.2 billion gallons of corn ethanol with gasoline this year. This will require 4.7 billion bushels of corn, 40 percent of this year’s crop.

Almost half (40%) of our corn goes to produce ethanol.  That alone has raised the price of our food.  And a lot of our food has corn in it.  Including cows.  As in corn-fed beef.  Dairy cows, too, eat corn.  They give us milk and cheese.  Chickens eat corn.  Providing us with low-fat chicken breasts.  Eggs.  And those delicious Chicken McNuggets our kids love.  Our energy/environmental policies have been increasing the cost of groceries for families.  And the drought is only going to increase them more.  Making it ever harder for the American family to put food on the table.  Especially when a lot of them are struggling to get by on less thanks to an already bad economy.  So why do we use food to fuel our cars?  Because the government has dictated that we do.

The price of corn is a critical variable in the world food equation, and food markets are on edge because American corn supplies are plummeting. The combination of the drought and American ethanol policy will lead in many parts of the world to widespread inflation, more hunger, less food security, slower economic growth and political instability, especially in poor countries…

Any defense of the ethanol policy rests on fallacies, primarily these: that ethanol produced from corn makes the United States less dependent on fossil fuels; that ethanol lowers the price of gasoline; that an increase in the percentage of ethanol blended into gasoline increases the overall supply of gasoline; and that ethanol is environmentally friendly and lowers global carbon dioxide emissions.

The ethanol lobby promotes these claims, and many politicians seem intoxicated by them. Corn is indeed a renewable resource, but it has a far lower yield relative to the energy used to produce it than either biodiesel (such as soybean oil) or ethanol from other plants. Ethanol yields about 30 percent less energy per gallon than gasoline, so mileage drops off significantly. Finally, adding ethanol actually raises the price of blended fuel because it is more expensive to transport and handle than gasoline.

Ethanol isn’t what they say it is.  In fact it makes a pretty poor fuel.  And it will propagate hunger and economic devastation throughout the rest of the world.  Especially in poor countries.  So there is no good reason to use food to fuel our cars.  It would appear the only reason why the government dictates this policy is that the lobbyists make it worth their while to dictate this policy.  Amazing what you can get away with when you veil your special interests in the cloak of environmentalism.  The media and the court of public opinion eviscerate any non-environmental corporation for doing what the ethanol lobby does.  But if you want to make evil profits all you have to do is say ‘global warming’ and no one will fault you for your greed.

Families will have to cut out their visits to McDonalds as these high prices hit pretty much everything on their menu.  Which is an unintended consequence the government may actually like.  For they say our kids are too fat.  But this won’t make our kids happy.  They like their McNuggets.  Which can mean only one thing.  Our government hates kids.

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Gasoline is better than Liquid Natural Gas or Ethanol

Posted by PITHOCRATES - July 1st, 2011

Liquid Natural Gas and Subsidies

The problem with alternative fuels is that they all require subsidies.  That’s one thing gasoline never needed.  Because it was everything a consumer wanted at a price a consumer could afford.  But there’s a problem.  Although consumers like it, government doesn’t.  So they’ve been pushing ethanol to replace it.  And now liquid natural gas is making a comeback (see Goodbye gasoline? GM gives natural gas cars a boost by Edward McAllister posted 7/1/2011 on Reuters).

The United States has more natural gas than it knows what to do with – up to 100 years of supply, experts say – thanks to a new drilling technique called hydraulic fracturing which releases huge reserves of natural gas trapped in shale rock…

Drivers who fill up with natural gas at the pump saved up to $2 per gallon when gasoline prices hit $4 a gallon. (Graphic: here: r.reuters.com/get42s ).

First of all, the environmentalists are trying to shut down all fracking (busting open rock formations to release trapped oil and/or gas by pumping fluids into cracks and fissures).  They hate it as much as drilling for oil.  Because it’s environmentally unfriendly.  And contaminates the ground water.  Or so the environmentalists say.  New York State is sitting on a lot of natural gas in shale.  But getting that gas is on hold until the completion of environmental studies. 

And that $2 per gallon saving over gasoline?  Don’t count on it.  Because it takes more liquid natural gas (LNG) to go the same distance gasoline will take you.  LNG has only 65.7% of the energy content of gasoline.   Which means it will take 1.5 gallons of LNG to equal one gallon of gas.  Think of it this way.  Say you take a vacation that takes two full tanks of gas.  With LNG, it will take you three tanks.  So, yes, you’ll pay less per gallon at the pump.  But you will have to buy more gallons. 

For example, if you have a 14 gallon gas tank and gas is $4/gallon and LNG is $2/gallon, you’ll save $14 dollars to travel the distance that a full tank of gasoline will take you.  If gas falls to $3.50/gallon, the savings drop to $7.  If gas drops to $3/gallon, there is no savings.  Just the inconvenience of another stop at the filling station.  LNG is only a bargain when gas is closer to $4/gallon.  Or more.  Unless there’s something else to sweeten the deal.

Even if oil prices retreat again, some in the industry say natural gas will remain attractive due to its long-term abundance and the potential for government support…

Much hinges on politics. The Natural Gas Act launched in the House of Representatives in April proposes incentives for purchasing and building natural gas vehicles, replacing a previous bill whose sweeteners for users of the fuel have recently expired.

The proposed incentives include a 50 cent per gallon fuel credit, a purchasing credit that covers up to 80 percent of the extra cost of a natural gas vehicle, and tax breaks for building fuelling infrastructure. The bill has bipartisan support and some say it could pass this year.

Ah, yes.  Government support.  Which tells you one thing.  LNG is not a sweet deal.  If it were the government wouldn’t have to bribe you to use it.

Ethanol and Subsidies

The problem with government getting involved in the fuel business is that it politicizes the fuel industry.  If LNG was a value to the market the market would provide LNG.  But it doesn’t.  The same is true for ethanol.  It has no value in the market.  How do we know this?  Because it takes government subsidies to get it to the market (see Industry warns gas prices would rise 89 cents without ethanol posted 7/1/2011 on PolitiFact).

Those who favor rolling back ethanol subsidies argue that a roughly $6 billion subsidy is unsustainable given today’s rising national debt.

However, the ethanol industry, represented by a group called the Renewable Fuels Association, has made an aggressive counterattack, arguing that ethanol is vital to keeping a lid on gasoline prices — potentially a potent issue for Americans as gasoline hovers between $3 and $4 per gallon.

The trade group’s Metro station advertisement mirrors other information available on the group’s website. It says, “Ethanol reduced gas prices by 89 cents per gallon in 2010. Ethanol reduced the average American’s household gasoline bill by more than $800. If ethanol disappeared, gas prices could rise by as much as 92 percent.”

Now that this subsidy is threatened, the ethanol industry is going on the offensive.  They used some scientific studies for their claims.  Studies they funded.  And they played fast and loose with the facts.  That 89 cents saving per gallon was during the spike in oil prices when gas was around $4/gallon.  Over the decade (2000-2010) the savings was only 25 cents.  But it wasn’t even that much.  Because, like LNG, ethanol doesn’t have the same energy content as gasoline.  It only has 71.7% of gasoline energy.  Which means you need 1.4 gallons of ethanol to equal one gallon of gas.  So when you add ethanol to gas you’re just taking a lot miles out of every gas tank.

PolitiFact goes into more detail and gives Renewable Fuels Association a rating of ‘barely true’ for the accuracy of their advertisement.  They’re not lying.  But they are certainly misleading you.  Because of their selective use of facts and figures.  Which is the point.  Honesty doesn’t sell ethanol.  If you want people to buy it you just can’t tell the whole truth.

The Great Corn Con

And there’s a good reason why they aren’t telling the whole truth.  Because if people understood what was going on in the corn industry, they’d be furious.  Because they’re not saving the planet.  Or cutting our dependence on foreign oil.  No.  The only thing the corn subsidies are doing is making farmers rich.  And making people hungry (see The Great Corn Con by Steven Rattner posted 6/24/2011 on The New York Times).

Even in a crowd of rising food and commodity costs, corn stands out, its price having doubled in less than a year to a record $7.87 per bushel in early June. Booming global demand has overtaken stagnant supply.

But rather than ameliorate the problem, the government has exacerbated it, reducing food supply to a hungry world. Thanks to Washington, 4 of every 10 ears of corn grown in America — the source of 40 percent of the world’s production — are shunted into ethanol, a gasoline substitute that imperceptibly nicks our energy problem. Larded onto that are $11 billion a year of government subsidies to the corn complex.

Using corn for fuel only increases the price of corn.  And anything that uses corn.  Like food.

Corn is hardly some minor agricultural product for breakfast cereal. It’s America’s largest crop, dwarfing wheat and soybeans. A small portion of production goes for human consumption; about 40 percent feeds cows, pigs, turkeys and chickens. Diverting 40 percent to ethanol has disagreeable consequences for food. In just a year, the price of bacon has soared by 24 percent.

So it’s the high price of corn that’s making chicken and hamburger more expensive.  Remember that when you’re shopping for your next BBQ.  Or buying ingredients for that next meatloaf.  Just pick up some extra breadcrumbs to make that hamburger go farther.  It’s not all bad, though.  Sure, we’ll eat less.  But they’ve been saying we’re too fat anyway.  So perhaps a little malnutrition will help get us to a healthier weight.  The important thing to remember is all the good that will come from our sacrifice.  Like using less foreign oil.

Here is perhaps the most incredible part: Because of the subsidy, ethanol became cheaper than gasoline, and so we sent 397 million gallons of ethanol overseas last year. America is simultaneously importing costly foreign oil and subsidizing the export of its equivalent.

That’s not all. Ethanol packs less punch than gasoline and uses considerable energy in its production process. All told, each gallon of gasoline that is displaced costs the Treasury $1.78 in subsidies and lost tax revenue.

So we’re subsidizing the ethanol industry to produce ethanol to use instead of gasoline made from imported oil.  And paying a pretty price to do this.  And then we’re not using the ethanol for the reason we subsidized it in the first place?  The American taxpayer is paying higher taxes so we can provide a cheaper fuel for other countries?  While we still import the expensive foreign oil?  You know what you call this?  Government.

Govern against the Will of their Constituents

When government stayed out of the oil business gasoline was cheap and plentiful.  Didn’t need any subsidies.  And you didn’t have to bribe manufacturers to build a gasoline powered car.  Also, government didn’t have to subsidize the fuel dispensing industry either.  The oil companies built refineries, pipelines and gas stations everywhere.  If there was a road there was a gas station.  If there was a city there was a car dealership selling gasoline-powered cars.  It all worked.  As if by magic.  With no help from the government.

Ethanol and liquid natural gas have never worked.  Despite government spending billions in trying to make them work.  The problem?  The market just doesn’t want them.  Like a dog that doesn’t want to swallow a pill.  You can do whatever you want.  Hold his mouth shut.  Stroke his throat.  Whatever.  He’s just going to spit that pill out once you let go.  And consumers have been spitting back every attempt to put us in alternative fueled vehicles.  We just don’t want them.

But government does.  Because they profit from them.  The corn lobby goes to Washington with cash.  And politicians like cash.  So much so that they will repeatedly govern against the will of their constituents.  And they don’t care if their policies increase the price of food.  Because they’re rich.  They can afford it.  Thanks to those lobbyists.  And those nice salaries and benefits courtesy of the taxpayers.  We may be eating meatloaf made with more bread than meat, but they’ll be enjoying fine corn-fed steak.  Along with some nice corn-fed bacon.

All men are created equal?  Our elected representatives apparently didn’t get that memo.

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LESSONS LEARNED #57: “Environmental policy is a zero-sum policy; save the planet, kill man.” -Old Pithy

Posted by PITHOCRATES - March 17th, 2011

DDT gets rid of Mosquitoes and Malaria

No one thinks much about malaria in big American cities.  Because they’re modern, paved cities.  So there aren’t a lot of mosquitoes.  At least, not like there used to be.  In colonial times, summers were bad.  Anywhere there was standing water.  Thomas Jefferson hated to be anywhere near tidewater areas during the summer months.  Because people got malaria.  He thought it was the air.  It wasn’t.  It was the mosquitoes.  Unpaved areas in tidewater streams just bred mosquitoes wholesale. 

As our concrete cities grew these wetlands went away.  As did malaria.  In the United States.  Other nations, though, were not so fortunate.  Especially sub-Saharan Africa.  Where malaria kills hundreds of thousands of children each year.  Why?  Because much of sub-Saharan Africa is impoverished.  With no modern, paved cities.  And it’s a mosquito paradise.  For awhile, that is.  Because man stepped in and used chemistry.  Created a miracle synthetic pesticide.  DDT.  And went to war against mosquitoes.  Campaigned especially fiercely in the tropical countries that really favored mosquito breeding.  Armed with DDT, it was a lopsided war.  Areas that saw millions of people infected by malaria each year had less than a hundred people infected after the DDT campaign.  It was a huge success.  Chemistry saved the children.  It was so successful they also used it in agriculture.  Food yields improved with the resulting pest elimination.  The mosquito and other pests were on the run.  But then an unlikely ally saved them.  Rachel Carson.

Carson wrote Silent Spring.  Published in 1962, she saved malaria.  And started the environmental movement with her attack against chemistry.  It was hurting the environment.  DDT was thinning egg shells.  And some other nasty stuff.  And perhaps it was.  But there were two uses of DDT.  Heavy agricultural uses.  And the lighter anti-malaria uses.  Some of the things she cited may have been more on the agricultural side.  In any event, environmentalism was born.  DDT fell out of favor and nations banned it or discouraged its use.  And malaria returned in force, killing hundreds of thousands of kids each year.

Firebreaks stop the Spread of Wildfires

Smokey the Bear says only we can prevent forest fires.  Well, that’s not exactly true.  We can’t change the weather.  Oh, sure, we can change the climate by warming the earth with manmade greenhouse gases, but we can’t make it rain.  Or stop the lightning.  Put the two together (a long time without rain then a lightning storm) and it will start a forest fire/wildfire.  And there’s nothing we can do about it.  Well, there’s nothing we can do to prevent it from starting.  But we can limit the severity of the wildfire.  By cutting firebreaks in the forest.

Dried trees burn very well.  And dried brush makes excellent tinder.  As a forest burns, the trees burn and flick off embers.  The wind blows the embers downwind.  Where they land on dried brush (i.e., tinder).  A fire smolders.  Then takes hold.  Flames grow.  And jump to the trees.  Which flick off embers.  That blow downwind.  And so on.  This is how fires travel.  And sometimes you can’t stop them.  They get too big to try and douse with water.  So they burn.  And the only thing that will stop them is the lack of fuel.  And this is where a firebreak comes in handy.  If you cut firebreaks into the forest at strategic locations the fire will spread until it comes to one of these fire breaks.  The embers flicking off of trees will then fall harmlessly on the firebreak.  Where there is no fuel.  And the embers will burn out.  Without starting a new fire.  Depending on the strength of the winds and the width of the firebreak, you can stop a lot of fires.  As long as there isn’t a rat living in the area.

Fire struck Riverside County outside Los Angeles in 1993.  It was huge.  And hungry.  That fire advanced and ate everything in its path.  Trees.  Brush.  And houses.  Homeowners in Riverside Country wanted to plow in some fire breaks to protect their homes.  Unfortunately for them, they shared their habitat with the kangaroo rat.  Which was on the Endangered Species List.  And plowing in those firebreaks may have harmed those rats burrowed shallowly in the sandy soil where all that tinder was growing.  So they were forbidden to cut in those firebreaks.  To save the rat.  And the fire burned through their houses.  And kept on burning.

The Food Chain Turned Upside Down

The San Joaquin Valley in central California is one of the most fertile farmlands in the world.  The Westlands.  Some call it the food basket of the world because they grow so much stuff there.  The San Joaquin River is fed from the snow in the Sierra Nevada Mountains and drains into the Sacramento-San Joaquin River Delta.  And it’s from this delta the government has helped the farmers pump water to irrigate their farmlands.  That is, until drought hit the area.  And a little fish.  A tiny smelt.

In the Delta there lived a fish.  This fish was on the Endangered Species List.  And this fish liked to hang around with man.  And the things man built.  Like water pumps.  With the prolonged drought, those irrigation pumps were pumping a lot of water.  And apparently killing a lot of smelt.  That were hanging around the pump inlets.  So a federal judge ruled in 2008 to shut off the irrigation pumps.  To save the fish.  And they did.

Without water farmers can’t farm.  So land went unused.  Farmers planted fewer tomatoes.  And fewer of their other crops.  Worse, some farmers had to destroy some of their healthy crops.  Such as almond trees that took 30 years to grow.  Without water they’d died.  And dead trees attract pests.  That can spread to healthy trees.  So it was either cut down some of their trees.  Or face pest infestation and lose all of their trees.  So food production in the fertile San Joaquin Valley dropped.  There was less food.  Which, of course, raised food prices.  All to save a small fish.

Diverting Corn from Dinner Tables to Gas Tanks 

Some say that we have to find an alternative to oil.  Because oil will run out one day.  Soon.  They’ve been saying this for decades.  And we haven’t run out yet.  But that’s beside the point.  The point is that they say it will run out because of our increasing demand for gasoline to drive our cars.  And that rising demand one day will exceed the oil supply.  One of their solutions?  BiofuelsEthanolFlex FuelE85.  Made from corn.  Our food.  And others.  For we feed a large part of the impoverished world with our surplus corn.

Back in the summer of 2008, gas hit $4/gallon.  That hurt.  The pain was so bad that it made people change behavior.  They bought smaller cars.  Hybrids.  And cars that ran on the ‘cheaper’ E85 (ethanol).  Which sold for something like fifty cents less than unleaded gas.  It seemed like quite the bargain.  Until you used it.  As those who had a significant commute to work soon learned.  One tank of gas let you commute to work for a whole week.  A tank of ethanol?  It didn’t take you quite as far.  People often learned this the hard way.  After having to stop in an unseemly part of town to refuel late night on the way home from work after hearing that ‘low fuel’ chime unexpectedly.  Those of us who did soon switched back to gasoline.  Why?  To prevent late night surprises like that again.  And because we just don’t like pumping gas.  Or, should I say, ‘fuel’.

You see, ethanol has less energy than gasoline.  So it takes more of it to go as far as gasoline takes you.  When you crunched the number you were actually paying more using the ethanol.  Because you were buying more of it.  Which brings us back to the interesting argument of why we have to replace oil.  Because our growing demand will eventually use it all up.  Now, let’s apply that logic to ethanol.  And the fact that it takes more ethanol to drive as far as with gasoline.  What does that tell you?  They will divert an enormous amount of our corn crop from dinner tables to gas tanks.  Making less food available for us.  And for export.  Which will do what?  That’s right.  Make some people go hungry.  And increase food prices.

Trading Humans for non-Humans

Advancements in environmental policy come at the expense of man.  Every time they protect an endangered species man has to yield ground.  When we fight global warming it is man who makes the ultimate sacrifice.  We have to lose some liberty.  Pay more for food.  Or eat less.  When they ban life-saving chemicals people die.  Hundreds of thousands of them.  Especially children in sub-Saharan Africa.  All in the name of saving the planet.

Environmentalists are okay with this.  For they must know about it.  And yet they pursue their agenda.  So they don’t mind the zero-sum game they play.  Trading humans for non-humans.  Because they favor the non-humans over the humans.  So when it comes to saving the planet or saving man, their choice is an easy one.  They save the planet.  And kill man.  For the human dead are acceptable collateral damage in their war to save the planet.

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