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April 18, 2009
The left (and some of our agricultural industries firmly ensconced on the tit of federal subsidies) just can’t let go of one of the worst ideas in decades: ethanol.
The cup of evidence against ethanol has runneth over. The overspill is becoming, not just a dribble, it is a flood.
Ethanol industries, in spite of huge tax breaks and heavy state and federal subsidies, are going bankrupt and/or closing down every day.
Here is the latest on the situation from the WSJ:
In September, ethanol giant VeraSun Energy opened a refinery on the outskirts of this eastern Iowa community. Among the largest biofuels facilities in the country, the Dyersville plant could process 39 million bushels of corn and produce 110 million gallons of ethanol annually.That’s just a taste of what’s going on in the make believe world of “Green Energy and Ethanol.” Raising the cost of food worldwide -- in a world where some people face starvation everyday -- seems a strange “moral imperative.” Those environmentalists who think they are saving the planet by using poor people’s food to fuel their cars … might want to think again.
Two months after Dyersville opened, VeraSun filed for bankruptcy, closing many of its 14 plants and laying off hundreds of employees. VeraSun lost $476 million in the third quarter last year.
Consumers were asked to suspend disbelief as policy makers blurred the lines between economic reality and a business model built on fantasies of a better environment and energy independence through ethanol. Notwithstanding federal subsidies and mandates that force-feed the biofuel to the driving public, ethanol is proving to be a bust.
The federal government gives ethanol producers a generous 51-cent-a-gallon tax credit and mandates that a massive amount of their fuel be blended into the nation's gasoline supplies. And those mandates increase every year. This year the mandate is 11 billion gallons and is on its way to 36 billion gallons in 2022.
Three years ago, ethanol producers made $2.30 per gallon. But with the global economic slowdown, along with a glut of ethanol on the market, by the end of 2008 ethanol producers were making a mere 25 cents per gallon. That drop forced Dyersville and other facilities to be shuttered. The industry cut more than 20% of its capacity in a few months last year.
What's more, as ethanol producers sucked in a vast amount of corn, prices of milk, eggs and other foods soared. The price of corn shot up, as did the price of products from animals -- chickens and cows -- that eat feed corn.
But President Barack Obama, an ethanol fan, is leaving current policy in place and has set $6 billion aside in his stimulus package for federal loan guarantees for companies developing innovative energy technologies, including biofuels. It's part of his push to create "green jobs."
Read the whole story here.
Hat tip: Otis A. Glazebrook (IV!)