Ethanol, Another Boondoggle!

Today’s Business Section in The Oregonian has an article by Harry Esteve titled Legislators are getting on biofuel wagon.

Oregon would join the national fervor over biofuels under a bill that appears to be on a fast track for passage in the Legislature.

The package of tax breaks and gas-blending requirements is meant to add horsepower to the state’s fledgling industry of turning products such as corn and canola seed into fuel for cars.

The bill is “good” for farmers and allegedly lowers pollution, something the big city voters want.

Under the bill, dealers would be required to sell a 2 percent biodiesel blend for diesel, once production in Oregon has reached 5 million gallons per year, and a 10 percent ethanol blend for gas, once production has reached 90 million gallons per year. (emphasis added)

Ethanol is good is it not? Well, not so fast kemo sabe! Ronald R. Cooke recently wrote WHAT IS THE REAL COST OF CORN ETHANOL? for Financial Sense.

Thanks to Federal mandates and subsidies, corn used for the production of corn ethanol is expected to increase from ~ 700 M(illion)Bushels in 2000/2001, to 3.2 B(illion) bushels in 2007/2008 – an increase of 357 percent. On December 11, 2006, the USDA estimated 2006-2007 U.S. ending stocks would be 935 million bushels, down from 1.97 billion bushels in 2005-2006. That decreases the ending stocks by more than 50 percent and puts the ending stocks to use ratio at 8%, – the lowest in 11 years. It should be obvious to all, we are going to need a lot more acreage and big yield improvements if corn production is going to keep up to demand. Prices could exceed $4.50 per Bu by the end of 2008.

Futures prices for corn have risen from 2.04 per bushel in late 2004 to 4.00 per bushel in January, 2007, so his estimate looks conservative. (See Corn Chart) We export 20% of our corn and already Mexican poor are complaining about the cost of tortillas. And those higher corn prices are filtering down through our food chain. Look for higher prices to increase the price of meat, poultry, fish, milk and eggs, corn meal, corn flakes, corn oil, and hundreds of other food items

Since 2000, the price of beef is up 31%, eggs up 50%, corn sweeteners up 33%, wet corn milling up 39%, and corn flakes are up 10%. Chicken prices haven’t changed very much. Yet.

Then there’s the cost to the tax payer:

Anxious to make sure its corn ethanol mandate gets done, Congress has also decided to take our tax money and use it to subsidize the production of ethanol. The current ethanol subsidy is a flat 51 cents per gallon of ethanol paid to the agent (usually an oil company) that blends ethanol with gasoline.

But there is more. It costs money to store, transport and blend ethanol with gasoline. Since ethanol absorbs water, and water is corrosive to pipeline components, it must be transported by tanker to the distribution point where it is blended with gasoline for delivery to your gas station. That’s expensive transportation. It costs more to make a gasoline that can be blended with ethanol. Ethanol is lost through vaporization and contamination during this process. Gasoline/ethanol fuel blends that have been contaminated with water degrade the efficiency of combustion. E-85 ethanol is corrosive to the seals and fuel systems of most of our existing engines (including boats, generators, lawn mowers, hand power tools, etc.), and can not be dispensed through existing gas station pumps. And finally, ethanol has about 30 percent less energy per gallon than gasoline. That means the fuel economy of a vehicle running on E-85 will be about 25% less than a comparable vehicle running on gasoline.

Cooke analysis suggests the total cost of Corn Ethanol @ 85% Blend is $6.89!

What are the benefits? Since most cars now have fuel injected engines that self-adjust to the fuel mixture

Corn ethanol does little, if anything, to reduce the tailpipe emissions of late model cars.

It is likely E85, when compared with standard gasoline, will reduce tailpipe emissions from oxides of nitrogen, 1,3-butadiene, and benzene. Methane and total organic gas emissions are greater. Carbon monoxide ad CO2 results vary from reasonably good to really terrible. The real eye opener is a large increase in formaldehyde (isn’t that the stuff they use to embalm dead people?), and a huge increase in acetaldehyde emissions. A suspected neurotoxin, exposure to acetaldehyde vapor will irritate the victims eyes, skin and respiratory tract. The State of California has determined that acetaldehyde is a carcinogen.

Cooke says we may release more pollution into the atmosphere producing more corn.

Corn requires copious quantities of oil and natural gas for herbicides, pesticides, and fertilizers. These – along with tons of eroded soils – are deposited as a polluted waste in our rivers and oceans.

I have only scratched the surface of the long article, but it is clear that there are many unintended consequences and costs that haven’t been talked about leading me to believe that Ethanol is another government boondgggle. I shake my head when Sen Hillary R. Clinton wants to grab all the “obscene” profits of the oil companies and invest that money strategically in alternative fuels. I shake my head that the Democrats in Oregon would fall for this and require that I buy something that could hurt my car.

I smell stupidity!

Ethanol Corn Sen. Hillary R. Clinton Ronald R. Cooke E85 Mover Mike

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