Ethanol Losing Favor With Everyone

UPDATE #2 U.S. automakers and ethanol producers are headed for a showdown over how much corn should be allowed in the nation's gas tanks.

Detroit's Big Three — along with Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co., and every other major automaker — filed suit Monday in the U.S. Court of Appeals in Washington to block a federal plan to allow fuel stations to start selling E15, a blend of 15 percent ethanol and 85 percent gasoline. All models on the road can travel on E10, a 10 percent blend. Most fuel pumps carry E10.

A waiver granted by the Environmental Protection Agency in October would allow the higher blend of ethanol to be sold for cars built in the 2007 model year and newer.

Automakers argue that allowing E15 for some vehicles will confuse consumers and could damage older vehicles. They have urged more testing before E15 can be sold at the pumps.

"We want to be sure that any new fuel will not increase air pollution, harm engines or endanger consumer safety," said Michael Stanton, president and CEO of the Association of International Automobile Manufacturers.

Boat manufacturers and lawn equipment makers joined automakers in the suit. [Editor's Note: Another article explaining why ethanol is a big boondoggle. Electric is the future folks, that is where all car companies are focusing their R&D]

12/20/10 Responding to a lawsuit filed by engine manufacturers against the U.S. Environmental Protection Agency (EPA) to block E15 (15% ethanol/85% gasoline) from being sold as a legal fuel in the United States, the Renewable Fuels Association issued the following statement:

"EPA could have avoided this kind of market confusion by following all the science to its logical conclusion and allowing the use of E15 for all cars and light duty pickup trucks. The only way to
meet the nation's energy, economic and environmental goals as put forth in the Renewable Fuels Standard is to increase ethanol consumption.

Allowing for the use of E15 blends is a safe and appropriate step toward meeting these goals. The RFA will continue to press for the safe and effective use of higher level ethanol blends in both conventional as well as flexible fuel vehicles."

12/10/10 In a follow up to The Schork Report's Tuesday discussion on ethanol, yesterday numerous news outlets reported that Sen. Dianne Feinstein (D-Calif.), one of the ethanol industry’s harshest critics, conceded that the extension of the full 45 cent/gallon tax credit for U.S. ethanol blenders will likely make it into the final tax package.

On the same day, the liberal (let’s be honest) Washington Post ran an opinion piece, titled, "Wasting tax dollars on ethanol" and the conservative National Review ran a similar piece, "Ethanol: Let Protectionism Expire," each calling for the elimination of the 45 cent per gallon ethanol tax credit as well as the 54 cent/gallon tariff.

Both articles (as well as numerous others) cited last July’s report from the Congressional Budget Office in which the CBO concluded that biofuel tax credits reduced federal excise tax collections by about $6 billion below what they would have been if the credits had not been in effect for fiscal year 2009.

Bottom line, outside of the Corn Belt, ethanol is losing favor on both the Left and Right.

"By virtue of government fiat, U.S. ethanol producers have a guaranteed market regardless of whether or not the tax credits are extended."

The Post’s opinion mentioned the CBO’s estimation that the cost to the taxpayer of using a biofuel to reduce gasoline consumption by one gallon are $1.78 for corn ethanol and $3.00 for cellulosic ethanol on an energy equivalent basis. The article in National Review spoke of the costs too, as well as the de minimis impact on ethanol demand.

After all, the Energy Independence and Security Act of 2007 expanded the Renewable Fuels Standard to require that 36 billion gallons of ethanol and other fuels be blended into gasoline, diesel, and jet fuel by 2022. In other words, by virtue of government fiat, U.S. ethanol producers have a guaranteed market regardless of whether or not the tax credits are extended.

As analyzed in today’ issue of The Schork Report, the U.S. government is paying the industry to abide by the law the government created. Nevertheless, costs to the taxpayer and government mandated rent-seeking aside, the argument to eliminate the credits and abolish the tariff just might be moot.

We suppose Congress will just have to get serious about fiscal discipline elsewhere.

[Editor's Note: See related article on people starving while NASCAR and IRL are endorsing ethanol. When in doubt, do what's right. Ethanol is wrong on so many levels. The sooner NASCAR and IndyCar get their hands out of the Ethanol industries pockets on this the better, because eventually it will come back to bite them in the posterior. Meanwhile all car companies are investing heavily in electric propulsion systems for cars because that is indeed the future of the automobile. If NASCAR and IndyCar want to do the right thing, they will make a move to incorporate electric motors in their cars, first to supplement the cancer causing fossil fuel burning engines they use today and eventually to replace them altogether as battery technology improves.]

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