Last Wednesday I featured a guest commentary is this space from State Senator Tom McClintock. Entitled Ethanol Economics, McClintock made the case against a recent decision by the California Air Resources Board to mandate that by 2010, every gallon of gasoline sold must be made up of at least 10% ethanol.
Bonus link: What is ethonal? The Wikopedia entry is here.
Today I am pleased to feature a ‘rebuttal piece’ penned by former California Secretary of State Bill . Jones, the Republican Party’s nominee for U.S. Senate a few years back, is now the Chairman of the Board of Pacific Ethanol:
**There is more – click the link**
June 26th, 2007 at 12:00 am
Bill Jones could have been a lot more clear about his involvement with ethanol- Jones has millions of dollars tied up in the ethanol business. Good or bad, Jones supports ethanol- its good for his wallet. Bob Mulholland
June 26th, 2007 at 12:00 am
Mr. Jones writes, “Today, ethanol is about 65 cents per gallon cheaper than gasoline in the California market.” I have a question, how much of this price differential is due to the some $40+ billion per year in federal subsidies to corn farmers? If a considerable amount of that is due to subsidies, as I suspect it is, then doesn’t that mean that corn-based ethanol is not really much of a real solution? What about the numerous studies that have shown that when fertilizer, processing, and transportation is taken into account, we actually have to put more energy into making corn-based ethanol than we get out of it?
Color me more than a bit skeptical. I don’t want to begrudge Mr. Jones’ ability to earn a good living – I just don’t much enjoy his earning a good living from my hard-earned tax dollars.
All the best,
Chuck DeVore
State Assemblyman, 70th District
http://www.ChuckDeVore.com
June 26th, 2007 at 12:00 am
I did a quick fact check – it’s far worse than I thought.
Corn ethanol subsidies totaled $7.0 billion in 2006 for 4.9 billion gallons of ethanol. That’s $1.50 per gallon! (According to zfacts.com)
Factoring for high gas prices, producing a gallon of ethanol cost 38¢ more than making gasoline with the same energy. The $1.12 paid over the cost of the actual cost went as a $5.4 billion profit windfall paid to farmers, large corporations such as ADM, and ethanol makers.
Ethanol blenders get $2.5 billion of tax money, corn subsidies for corn ethanol gets $900 million of our tax money, and the last $3.6 billion is paid at the pump.
Kind of makes you feel warm and fuzzy all over, doesn’t it?
All the best,
Chuck DeVore
State Assemblyman, 70th District
http://www.ChuckDeVore.com
June 26th, 2007 at 12:00 am
I’m not an expert on ethanol, but one thing is clear: if it was cheaper and better than gasoline, government would not need to mandate its use. Everyone would switch to ethanol voluntarily.
Thus, we know that ethanol is a rip-off because it requires government mandates.
June 26th, 2007 at 12:00 am
As a commodity broker, I can tell the FR readers that corn has been going up exactly because of the huge federal subsidies on it. Chuck is 100% correct.
June 27th, 2007 at 12:00 am
McClintock’s right though I don’t think he delved into technicalities.
Aside from the above government subsidies, it’s a waste of energy!
Oil -> refining -> gas -> car engine is a far more energy efficient (i.e, limited loss steps) energy path than fertilizing soil (fertilizer requires lots of energy to create!), growing the crop, shipping the crop to processing, fermentation, etc.
It delivers less energy per unit volume. Most oxygenates also *reduce* mileage – meaning per-mile emissions increase, because a given parcel of fuel moves the car a shorter distance. (Ethyl alcohol combustion also leads to aldehyde formation, which is not addressed by catalytic converters.)
Need to go back to high school chmeistry, Jones.
Bill Wiese
San Jose, CA