And it's costing
billions.
The "pig" is U.S.
consumption of oil - 20.6 million barrels/day (
24% of the world's total). Yet U.S. population is less than 5% of the world's total. Ethanol subsidies reduce the cost of non-renewable energy, thereby encouraging more energy use.
My primary beef against ethanol -
from the Department of Energy -->
the "net energy balance" of making fuel ethanol from corn grain is 1.34; that is, for every unit of energy that goes into growing corn and turning it into ethanol, we get back about one-third more energy as automotive fuel.
And, all 2.34 units of energy used contribute to global warming.
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Other details including, 'How much are the subsidies?' From a June 8, 2007
article in the Washington Post by Steven Mufson and Dan Morgan (bold added)-
If the current tax credits, grants and loan guarantees are extended, the package would cost taxpayers $140 billion more over the next 15 years. New proposals under consideration in Congress could raise that tab to $205 billion. Neither the White House nor Congress has spelled out how they plan to square the costs with other budget priorities.
The agribusiness community has recently split over the issue. The chicken and cattle industries, hurt by rising corn prices as demand for ethanol climbs, have lobbied against the generous tax subsidies for corn farmers and others in the ethanol industry.
Moreover, the technology to produce cellulosic ethanol -- made from wood, waste or grasses -- at a commercially competitive price does not yet exist.
Many economists cringe at that thought (cellulosic plants won't be built without government guarantees). "If the aim is to reduce gasoline consumption, the best way is to raise the gasoline tax," said Ian Parry, economist at Resources for the Future. "That exploits all potential options for saving fuel -- driving less, increasing vehicle fuel economy over the longer run, and creating more demand for hybrids and alternative fuels like ethanol. Lowering the price of ethanol only exploits the last of these responses, so it is far less cost-effective than raising gasoline taxes."
Rep. Tim Holden (D-Pa.), who chairs the House Agriculture subcommittee dealing with energy, contended that "we
need a Manhattan Project . . . we need to be less dependent on energy." (No, we need you, or another representative to propose a tax shift from income to energy.)
So we're going to pay billions in subsides and even agribusiness doesn't support the subsidies because of unintended consequences like higher food prices. Awarding subsidies like this is communistic. It doesn't work.
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What is the Senate considering? From a June 16, article in the Washington Post by Steven Mufson (bold added)-
The proposal includes requirements that the use of biofuels -- part corn-based ethanol and part fuels made from other feedstocks -- climb to 36 billion gallons by 2022, more than six times the capacity of the nation's 115 ethanol refineries.
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Are these huge ethanol subsidies worth it? If ethanol is so promising why are large subsidies needed? Why are they backed by many Presidential candidates? --> Two words: "Iowa primary"
Instead, why not shift federal income taxes to energy. This would lead to less driving, less gasoline consumption, and therefore a smaller U.S. "energy pig."
