The Great Ethanol Scam of 2011

Having trouble viewing this issue? Click here. Refer a Friend to Energy and Capital.

The Great Ethanol Scam of 2011 By Jeff Siegel | Monday, June 20th, 2011 So let's see where we are... In an effort to get our fiscal house in order, Republicans decided it would be a good idea to cut funding for public radio and Planned Parenthood. Because clearly, this is what's bankrupting this country. And last week, Joe Biden told reporters one of his first wasteful spending targets is a website dedicated to the desert tortoise. Are you freakin' kidding me?! Can you believe the stones on this guy? Meanwhile, the Senate has just rejected bills to end billions in tax breaks for oil companies and billions more in ethanol subsidies. The latter just went down last week, with a 40-59 vote. Most votes against ending this particular ethanol subsidy came from Democrats — although despite Oklahoma Senator Tom Coburn announcing that Senate Democrats killed the measure, 13 of his fellow Republicans also voted against the bill. (Not surprisingly, these were mostly senators from corn-producing states. Shocker!) Advertisement M.I.T. researchers say it can provide 130,000 times our annual electricity consumption... Secretary of Energy Steven Chu says its quantities are "effectively unlimited"... Now, meet a tiny public company that's practically being bankrolled by Uncle Sam to take this power source mainstream. Click here for more info. Regardless of which side of the aisle you call home, the bottom line is the whole thing is just one more gigantic tax payer-funded scam that, by the way, does nothing to solve our oil addiction... It only prolongs it. What $54 Billion Buys You For the sake of clarification, this subsidy — known as the Volumetric Ethanol Excise Tax Credit (VEETC) — was initially designed to provide incentives for fuel suppliers to blend ethanol with gasoline. But since they're already required to do so under the 2007 Renewable Fuel Standard, we're basically paying these guys to follow the law. If we're going to do that, I want the government to send me a fat check every month for obeying the speed limit. U.S. taxpayers have ponied up $22.6 billion in ethanol subsidies since 2005. Another $31 billion will be spent in the next three years. Now, supporters of the VEETC will tell you that the subsidy ultimately benefits the consumer by lowering gas prices. But they neglect to tell you that government-subsidized ethanol production also increases the cost of your food. Sure, high food prices are not the result of just ethanol production. Bad weather, increased demand, high oil prices all play a role. But as the USDA pointed out in its recent corn forecast, corn supplies will be very tight this year due to bad weather and the fact that the share of corn going to ethanol is increasing. In the United States, 35 percent of corn in the growing season ending in 2010 went to the production of biofuels. It's expected to reach 38 percent in 2012. In what universe does it make sense to allow a transportation fuel to monopolize nearly 40 percent of your primary food crop — particularly, a fuel used to power an outdated internal combustion engine?? Sorry, but this is one consumer who would happily pay a few extra pennies at the pump if it meant we could end these ridiculous subsidies, especially since corn-based ethanol isn't quite as “green” as some would lead you to believe... Advertisement After OPEC It's the biggest crude oil reserve... and it's so close, you can drive to it. Find out how 1.7 trillion barrels of previously untouchable crude is finally being taken from the ground — and the name of the company that pioneered this world-changing technology. Click here to learn more. This “Clean Fuel” Ain't So Clean! Years ago, it wasn't hard to find an environmentalist cheering the development of the ethanol industry. Rest assured, that time has passed. Today, ethanol gets about as much love from environmentalists as Exxon and Monsanto. The reason is simple: Ethanol is not so clean when you look at the complete lifecycle emissions... According to the Union of Concerned Scientists: Accurate lifecycle emissions accounting requires that all of the energy and inputs associated with growing, producing, delivering, and using any biofuel are tracked, including emissions associated with changes in land use. Most analyses conducted before 2008 indicate that corn ethanol delivers a 10 to 20 percent reduction in global warming emissions over its lifecycle compared with gasoline, but these analyses did not include land use changes. The reduction is modest because corn production requires a significant amount of fossil fuel inputs for farm operations, processing and distilling, and fertilizer production (generally natural gas). Fertilizers used for corn production also generate a substantial amount of nitrous oxide, a potent global warming pollutant, as unused fertilizer breaks down in the field. This is a mess... and we're paying for it. Brilliant! Look, we can keep talking in circles over this.  But the truth is, the quickest way for us to reduce our vulnerabilities to Peak Oil is to simply allow the market to operate without government interference. Let the true cost of gasoline mock us at the pump, and you'll not only see a major drop in consumption; you'll also see this nation get on the fast track to developing and embracing alternatives to the outdated conventional internal combustion engine. Let the market do what it's supposed to do, and you'll see the kind of inventiveness and resourcefulness the United States used to be known for. This will move us forward — not another $6 billion deducted from our paychecks. To a new way of life, and a new generation of wealth... Jeff Siegel Editor, Energy and Capital Related Articles Big Oil Welfare Big Oil Subsidies Oil Industry Tax Breaks From the Archives... Vestas to Supply Wind Turbines to China 2011-06-17 - Brianna Panzica The Transition to Renewables Begins 2011-06-17 - Nick Hodge Where Water's Lacking, The Wind is Still Blowing 2011-06-17 - Brianna Panzica U.S. Solar Market is Growing 2011-06-17 - Brianna Panzica Senate Passes Legislation to Help Out Bloom Energy 2011-06-17 - Brianna Panzica Economic Releases for the week of Monday, June 20th, 2011: Jun 21 - Existing Home Sales Jun 24 - Durable Orders Jun 22 - MBA Mortgage Index Jun 22 - FOMC Rate Decision Jun 23 - New Home Sales Jun 24 - GDP Brought to you by Wealth Daily

You can manage your subscription and get our privacy policy here. Energy and Capital, Copyright © 2011, Angel Publishing LLC, P.O. Box 84905, Phoenix, AZ 85071. All rights reserved. No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or the solicitation of an offer to buy or sell the securities or financial instruments mentioned. While we believe the sources of information to be reliable, we in no way represent or guarantee the accuracy of the statements made herein. Energy and Capital does not provide individual investment counseling, act as an investment advisor, or individually advocate the purchase or sale of any security or investment. The publisher, editors and consultants of Angel Publishing may actively trade in the investments discussed in this newsletter. They may have substantial positions in the securities recommended and may increase or decrease such positions without notice. Neither the publisher nor the editors are registered investment advisors. Subscribers should not view this publication as offering personalized legal or investment counseling. Investments recommended in this publication should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company in question. Unauthorized reproduction of this newsletter or its contents by Xerography, facsimile, or any other means is illegal and punishable by law. Please note: It is not our intention to send email to anyone who doesn't want it. If you're not sure why you're getting this e-letter, or no longer wish to receive it, get more info here, including our privacy policy and information on how to manage your subscription.