Ethanol doesn't equal higher food prices

Yes folks — it’s been out there….ethanol is responsible for the food shortages in the middle east.  I mean — it’s using up so much corn right?  And even if you are using it just as livestock feed it still makes prices go up — because there isn’t enough corn to feed the cows….and so feed is more expensive….making our food more expensive….I’ve heard that idea expressed around the water cooler.

Well — according to John Block, former Secretary of the USDA, there’s no connection to food prices and ethanol production.  Block lays out his well documented argument in today’s Chicago Tribune.

Certainly there are other issues that opponents raise about ethanol — but misinformation about rising food prices and food shortages are just a distraction.

67 Replies to “Ethanol doesn't equal higher food prices”

  1. anonymous

    “In the first decade of the 21st Century, both the Bush and Obama Administrations, along with Congress, have been enamored of an energy policy that relies on federal mandates and production subsidies to promote ethanol use as a cure-all for a host of problems….after three decades of federal subsidies, ethanol remains uneconomical even with the subsidies, trade protection, and the blending mandate. Ethanol policy is in reality nothing more than a wealth transfer policy disguised as an energy policy.”
    http://www.heritage.org/Events/2011/03/Corn-Ethanol

  2. anonymous

    If I was Obama I would travel around the country calling senators like John Thune out. They call Obama a big government liberal (rightly so) but then they themselves come out and support mandates to get ethanol produced and force auto companies to make the vehicles run on ethanol. (letting the Government pick winners and losers) – Thune passes this literature out in his district offices.

    The auto comapanies would do this on their own if ethanol was viable.

    I don’t know what a big government politician is anymore. Too many of them have ideas and think they need to mandate thier legislation. Ethanol is a faux solution to the energy crisis and it’s hard to take anyone serious who perpetuates it’s myth.

    That said I really like Thune and Noem on other issues but would like to see them called out on ethanol and their support for big government.

  3. Duh

    Think of ethanol subsidies as R & D. How can we get there if we don’t try? Poet has been working on total cellulistic ethanol production (i.e. refining anything organic) and I doubt that method would have been discovered without the journey we’ve taken thus far. $20 says that when ethanol haters fill up that they use ethanol even though they protest against it. If you don’t support it, don’t use it. The goal is to make the Middle East irrelevant. Wouldn’t that be nice???

    1. duggersd

      You lose. I do not use it. At least not on purpose. I have found the difference in the pump price does not really offset the difference in the mileage. While I do not have a problem with trying it, why is it they still need a subsidy to make it work? I am sure Poet has some great R & D going. And if they paid for it themselves, then what the heck? Instead you and I are making some very few people very rich.
      Here is something interesting. In Sioux Falls, gasoline with ethanol is 10 cents cheaper. At the Spencer exit along I-90 the gas station sells pure gasoline for 10 cents cheaper than ethanol. How is this possible? I think the same is true in Rapid City, but cannot be sure.

      1. Name

        You’re right, the price difference between ethanol and regular gas vs mileage makes it all equal. Since it is equal, then you have to ask yourself if you want 10% of your gas coming from American Farmers or Middle East terrorists. Your choice.

        As for people talking subsidies- subsidies for corn ethanol can be criticized but give me a break. Go do some research on the subsidies for oil companies. Energy is subsidized in several areas to make it more affordable for everyone. We can debate whether it is right to subsidize energy but we do subsidize all energy so don’t single out ethanol. Then ask yourself if you would rather subsidize oil or ethanol? Since the mileage is equal from paragraph 1 it goes back to would you rather subsidize farmers or terrorists? Again, your choice.

        1. duggersd

          Since there is no evidence ethanol actually decreases the need for imported fossil fuels, it appears I am supporting terrorists either way. And if we went ahead and drilled our own oil, we would not be dealing with terrorists, would we?

  4. Jon S.

    What do you know, a paid lobbyist for the ethanol industry argues that ethanol is wonderful. Who would have guessed it? Meanwhile, there are 16 university studies, including from the University of Minnesota and Georgia Tech, and an IMF study that show that corn ethanol policy is a major contributor to rising food prices and hunger in the world. You can read the University of Minnesota study in the May/June 2007 edition of Foreign Affairs. Follow ups were published in the Sept/Oct 2007 edition (which included a reply by Tom Daschle) and on the website in May 2008 (see it here http://www.foreignaffairs.com/articles/64915/c-ford-runge-and-benjamin-senauer/how-ethanol-fuels-the-food-crisis?page=show) Our corn ethanol policy is bad for the environment, does little to nothing to ween us off foreign oil, and contributes to world hunger. Its sole redeeming virtue seems to be that it props up the rural economies of America. That might enough to make the policy worthwhile, but it is not a reason to lie to ourselves about the economic and environmental realities that ethanol subsidization represents.

  5. Troy Jones

    Economic fact #1: We are diverting productive land to production of fuel vs. food. If we were to use this land for food, it would decrease the cost of food.

    Economic fact #2: The production of ethanol reduces use of fossil fuels for gas. Without the ethanol, demand for gas would be higher and thus driving up the cost of gas.

    Economic Question: Does the economic benefit of less demand for fossil fuel gas outweight the economic cost of increased food prices plus the subsidy?

    And if the answer the question is No, one has to then factor in the environmental net benefits of ethanol and the national defense implications of reliance on imported fossil fuels to make an informed decision.

    I don’t know the answer to this and I doubt anyone else who reads the SDWC has studied the question sufficiently to be really informed. But what I do know is this guy’s economic knowledge disqualifies him from being credible. Same with the liberal crazies who weigh in on the side. Too many political agenda’s are too blatant for either to be credible.

    1. DDC

      Troy,

      “Economic fact #2” simply is not true.

      The subsidies may lead to lower prices at the pump, but that actually leads to a greater demand for gasoline (people drive more) and that leads to importing more oil.

      Also, gasoline is less than half of what a barrel of oil gets turned into. Since the other products that oil is turned into cannot be replaced by ethanol, the demand for oil will remain mostly unchanged. Gas may be marginally cheaper in relation to other petroleum products, but we will still need to import that barrel of oil to meet the demand for those other products.

      Here’s a good read on how little of an effect ethanol production has on oil demand.
      http://www.manhattan-institute.org/html/ib_07.htm

    2. duggersd

      Cannot agree with your economic “fact” #2. Vehicles driving with ethanol have been shown to get less mileage than vehicles driving on regular gas. Also, how many fossil fuels are used to produce ethanol? Most of the farmers producing ethanol use equipment that use diesel fuel.

    3. JW@Aberdeen

      also ethanol cannot go through a pipeline so it has to be hauled by truck or train. How much extra fuel does that use. I save money by using regular gas.

    1. Name

      That artificial control that you are talking about is called speculation in a free market system. I think anyone not involved in the production or use of a certain product like oil, wheat, corn etc should not be allowed to purchase/buy futures in those products.

        1. Name

          No, it is not called speculation. It is called price floors, and price ceilings. The United States government sets an artificial price floor for the price of corn, for example. Just for the sake of the argument, say it is a bushel for $1.60. No bushel will sell below that; basically the government buys up the excess corn that would drive down the price in a free market, creating an artificially high price for corn, or whatever good you wish to substitute it with.

  6. DDC

    Yeah, diverting more and more land to grow more and more corn and turning around and burning that corn does nothing to drive up the price of that corn (and the other crops that could be grown in its stead).

    I guess my Econ 101 professor was full of it when he was teaching us those supply and demand curves.

    1. Name

      DDC, you are perpetuating a myth. There is no more land in corn acres now than in previous years. Don’t need to use more acres as the bushels grown on each acre has about doubled. Gone from roughly 80 bu/ac a few years ago to about 150 bu/ac. If you Econ 101 professor was talking about ethanol, he was full of it.

      1. DDC

        Nope, no myth.

        The USDA estimated that about 80 million of acres of corn were planted in 2000. They estimated that 87.9 million acres were planted in 2010. That’s almost a 10% increase according to my calculator.

        Yes, corn production did increase by about 30% in that same time period. But that really has no bearing on what we are talking about. The fact is that we are burning that additional 30% (and more) in our vehicles. If we were not burning it because of the artificial incentives to do so, that additional 30% of production would mean that we could use 30% less land to meet the normal demand for corn. We could be using that land to produce other crops. Conversely, if we continued to plant the same amount, the price of that corn would undeniably be lower than it currently is.

        The fact is that we are producing corn in record amounts, yet corn prices are extremely high, The only area that has shown an increase in demand for corn is the ethanol industry. We actually used less corn in 2010 than in 2000 if you take out the 4.7 million bushels that we used for ethanol.

        It doesn’t matter if my Econ 101 professor was talking about corn or if he was talking about Saleen Mustangs. Supply and demand is a universal truth. If I took 1/3 of the Saleen Mustangs produced in 2010 and crushed them, the price for the remaining 2/3rds would increase. It doesn’t matter how many of them they produced in relation to the number they produced in 2000. The price of a 2010 model would increase accordingly. Taking 1/3 of the US corn crop and turning it into ethanol has the exact same effect on corn prices.

        1. Name

          Over the last couple of years the corn acreage has remained about the same. Corn yields are still rising. There was no shortage when corn prices shot up, that was due to speculation. If your professor said that the corn prices shot up because ot a shortage, he was full of it. If you also think that the corn that is used in the production of ethanol does not go into food you are mistaken. The DDG that is a by product of ethanol is a high grade feed that is fed to cattle and other livestock.

          The major cost for the increase in the food supply is the cost of fuel, both to process the grain into food and to transport it to its destination. Look up the individual costs associated with food processing. You will see that the cost for wheat in a loaf of bread is about $.15 and for a box of corn flakes, about the same. You can double that and still not have much impact on the price that we pay at the store.

          1. DDC

            You’re going to have to stop moving the goal posts on me if you want to have an honest discussion.

            If you want to only talk about very recent history, fine. Yields were only marginally better in 2010 than they were in 2004 (~164 in 2010 vs ~161 in 2004).

            The simple fact is that acres planted in corn shot up about 15% from 2006 to 2007 and currently sits at about 10% over 2006. Any idea why? I’m pretty sure you know why. To say that it hasn’t increased dramatically is a complete lie.

            As to your DDG byproduct argument. Wouldn’t it be a lot cheaper to just take that corn and feed it directly to the livestock? It would seem to me that it is unnecessarily expensive to haul that corn to the ethanol plant to be processed and then turn around and haul it back to the farm to feed the livestock.

            Your corn flake argument is neither here nor there. Here in the US, we can absorb that extra 15 cents for a box of corn flakes pretty easily. We’re mostly talking about food shortages in developing nations. A 50% increase in the price of raw corn (or other raw food products) for someone make $3/day is pretty devastating.

            The fact is that here in the US and around the world farmers are planting corn instead of other crops. The artificially high demand for corn causes corn prices to be high and the fact that it is being planted instead of other crops causes the prices for those other crops to be higher as well.

            To say otherwise is ignoring reality.

  7. Troy Jones

    Dugger: I’m not trying to argue mileage. The point is ethanol fuels miles driven. If we didn’t have ethanol, we’d get less miles driven for each gallon of fossil fuel gas used resulting in more fossil fuel being consumed.

    Name: Whether or not we have more acres in corn isn’t the question (however, I think we, at least in South Dakota, have allocated more acres to corn in the last 15 years but that isn’t important), we ARE using the acres and production for fuel which otherwise would be used for increasing food supplies. If this production was put into the food market, it would drive down food prices. This is Economics 101.

    Together confirms my point. The ethanol question I opposed above needs to be looked at comprehensively without bias. Then it needs to be incorporated into the economic question if the resources should be steered to another form of alternative energy or whether steering resources via government fiat is the best way to develop alternative energy. Complicated analysis has to be done for a simple answer to be discerned. I fear too little analysis has been done.

    1. duggersd

      Troy, if I get fewer miles per gallon using ethanol laced gasoline then driving 1000 miles is going to take about the same amount of oil as using gasoline that is pure. It takes more gallons of gasahol than pure. So how is that using less oil? Add to that the amount of oil used to produce that ethanol and you are using more oil than if you used pure gasoline.

  8. Troy Jones

    Ooops: “The ethanol question I PROPOSED”

    Good information DDC. Confirmed my supposition. To build on it, food is a commodity and because of the increased productivity in the land, the only factor on causing food to be inflationary is demand for food increases more than supply. Not using acres for fuel would put a dampening effect on prices.

    What is ironic about this discussion is how the debate has changed in six years. In the Thune/Daschle race, the most significant accomplishment Daschle pointed to was all he has done to increase supply (subsidies for ethanol) and demand (mandates for use) for ethanol. Then, algore says he opposes ethanol on environmental grounds and liberals/Democrats made a 100% turnabout. Talk about sheep.

  9. Les

    Ask the cow calf producer how higher corn affected his bottom line putting a squeeze on both him and the feed lots. The local calf producers had lower prices while the corn producers had higher prices with most of the profits going to other than any of the producers.

    There is a corn product in almost every processed food in the store mostly high fructose corn syrup, again equals higher food prices.

    I love the statement “this is none other than wealth transfer described as an energy policy”. Wonderfully accurate. And, Flem is almost 100% in his description of price control which is about to blow up in our faces. Hang on for the ride, it will make what I remember about the 80’s look like a walk in the park.

  10. feasant

    Corn is not used then thrown away. Have you heard of the byproduct distillers grains? Cattle producers feed that to livestock. No human food being wasted. I doubt ethanol drives up corn prices more than locally. I have never used one bottle of heat since ethanol became available. If you don’t like it, don’t use it. I personally like it.

    1. anon

      feasant,

      when did you become in favor of supporting federal subsidies and the government picking winners and losers?

      I can’t believe you support ethanol because you can save 99 cents by not buying a bottle of heat.

      1. Name

        feasant: Totally surprises me to see you advocating for ethanol or government run anything in the first place. When did you become such a lover of big ag?

  11. Les

    No Feasant it is not thrown away. Corn is trucked to the ethanol plants, goes through a costly process that has yet to be defined as economically profitable, distiller grains dried which takes considerable more heat energy and then trucked back to the consumer feeders…there is at least double the transport costs along with the drying costs of the distillers grain before it is sold. I doubt the distillers product pays for the extra trucking and drying costs with much if any left over.

    Heart felt loyalty to any product benefits no one and that loyalty will last only as long as the subsidies.

  12. Name

    If Thune and Noem spent half the time working on getting real energy rather than pandering to ethanol and farmers this country would be in a lot better shape.

    Subsidies are my one pet peave that bugs me about those two individuals.

  13. MOSES

    Imagine all the wingers here who are against bank subsidies and the car industry, but want ethanol subsidized as well as farm subsidies.If you can’t make it on 6 buck corn and 13 dollar beans do something else.Also reminds me of Tune saying one thing in South Dakota and another In D.C.

    1. Troy Jones

      Moses, your simplified generalizations aren’t very intellectually rigorous or accurate and feeble attempts to generalize every negative position to the GOP while giving the Dems a pass is blatantly obvious to even the most casual reader of the War College. My guess a poll of Democrats in South Dakota would show a larger percentage in support of ethanol subsidies than a similar poll of Republicans. And if the poll were taken nation-wide, the divergence between Dems and Repubs would be even larger. The most clear evidence of this:

      In the 2008 Dem Presidential primary Clinton, Edwards and Obama’s strong support of ethanol was indistinguishable. In the GOP primary, you had Romney against them, McCain against them, and Ron Paul against them. Only Huckabee (who won Iowa) was for them.

      Democrat opposition to subsidies comes from two factions: The algore sychophants who oppose technologically available energy supplies (nuclear as well) or those who understand the effect of using acres for fuel on food prices.

      Republican opposition to subsidies principally comes from one faction: Those who oppose subsidies of any type.

      Democrat supporters of subsidies are those who believe the subsidies are good for the family farmer.

      Republican supporters of subsidies are either those who believe it is good for family farmers or who desire less reliance on foreign fossil fuels for economic or national defense reasons leading to national energy independence or understand it has a positive economic impact on the Gross State Product.

      But in the end, I’m pretty sure a majority of South Dakota in each party support ethanol subsidies. The method and type of support might be slightly different but not much.

      1. anon

        Troy

        Energy independance ethanol support is just the latest gimick for GOP to support ethanol. It’s a political easy thing to say.

        Ethanol isn’t my biggest issue but it really makes it hard to listen to my fellow conservatives rip obama for socialized medicine and then ask for money for ethanol.

        I’d rather give out better health insurance to the poor than ethanol subsidies to rich farmers. (I’m not a supporter of Obamacare or ethanol)

  14. Les

    Troy@ “”But in the end, I?m pretty sure a majority of South Dakota in each party support ethanol subsidies.””…………… Troy, I don’t doubt you’re not right, which is a very very sad epitaph for those who choose to ride on the back of others.

    This whole thought process of howling for more DC money is almost ludicrous if not insane. We’ll see what’s left of the dollar when Japan sells their US dollars to rebuild her nation.

  15. anon

    I think I’ll support Michelle Bachman for President. It’s between her and Trump for me.

    I like that Romney guy better than Huckabee.

    But I hope who ever our nominee is they oppose ethanol.

  16. JW@Aberdeen

    Ethanol is the biggest hoax on the public ever. If you want cheaper and plentiful energy drill baby drill. The next biggest hoax is the wind towers coal plants are the best for electricity.

  17. Name

    Let’s support big oil companys instead. No need to have our farmers here in South Dakota make some money. That would be bad for our economy.

  18. MOSES

    Looks like Troy got schooled, here again .Troy a subsidy is a subsidy regardless who gets it.Weather it be Detroit wall stree the family farm.How about this subsidy lets fully fund the V.A.so all veterans who served are allowed in regardless of income.How about raisng the pay of enlisted personnel by double for the milatary now I like that one.

  19. feasant

    Geez I must have hit a hot button. If consumers don’t use a product there will be no demand.

    I believe that “inexpensive energy, ” abundant resources and freedom is what made America great. As of right now oil and coal are the inexpensive energy. Only an idiot would think that if we don’t use coal, no one else will. Look at Buffet, he is hauling coal out of the US on his trains, China is burning it. I don’t think ethanol is the answer to our problems, but what is?

  20. Troy Jones

    People, I’m neither defending ethanol or criticizing it. I’m just trying to raise the issues, justifications for each side. Moses continued simplified and inaccurate generalizations are just so tiring.

    Anon: I agree with you. There is a political expediency to defend ethanol on the energy independence for those who normally are free enterprisers. But, there is also some reasonable rationale (not saying it is worth the cost or there might not be a better alternative) for it to contribute to independence, especially since it plays to a national strategic competance (growing food).

    Les: I understand your point but slightly disagree with the “sad” statement. It is reasonable and rational to have a collective parochial viewpoint on issues. It is built into especially the House of Representatives. The unfortunate problem is the unbridled willingness to have no budget discipline to live with our national means prevents the parochial from giving way to the national interest.

    Moses, a significant portion of what the government does is “subsidize” someone. K-12 education is a subsidy, state colleges are a subsidy, Medicaid is a subsidy, public libraries are a subsidy, cancer research is a subsidy, progressive tax rates are a subsidy, child care tax credits/deductins are a subsidy, wind power tax credits are a subsidy and on and on. The question is what national, state or local collective interest or objective is served by the subsidy and are the benefits worth the cost and/or are they of greater benefit than alternative choices for subsidy?

    You might support some subsidies and oppose others while I support some you oppose and oppose some you support. This is the nature of governmental policy debates. Yes, there might be some philosophical views which steer you to supporting/opposing certain ones while I’m on the other side. Similarly, there might be some individual determination of relative value/Values which cause us to reach different intellectual conclusions about the relative merits of one subsidy/objective of government.

    Nobody can claim to be opposed to subsidies. We all support our government to subsidize our values. The question is what is the collective will of the people, which is why we have elections and elected representatives.

  21. Les

    It damn sure isn’t burning oil to produce a more costly energy(read Monsanto profits) that results in more costly food(read Monsanto profits) on the table, same with wind powered gen having an extremely limited life with only subsidized profits. This isn’t about the farmer, this is about corporate profits.

    Conservation is our first and most sure way of limiting pollution and bringing costs down and that will only happen with higher prices forcing us to think.

    1. Troy Jones

      Les, as one who believes the “Monsanto-ization” of agriculture and food production (Genetically modified grains are modified for yield only without regard to nutrition value. I know this anecdote is about birds and not humans but it makes me wonder: Why is there always more pheasants in corn which is not genetically modified?) is contrary to our national interest, I can assure you corporate profits are not a consideration to me in discerning whether or not to support ethanol subsidies. In fact, it is a negative for me.

      And, I admit discerning a position might be excessively impacted by my belief it has a positive impact on rural South Dakota farmers and especially central South Dakota rural communities tempered by the impact it is having on cattle operation (which is a significant portion of my extended families ag operations). I’m trying my best to properly filter this bias to reach the best position for our nation.

      Finally, because I have reached a policy position that accepts the rationale for the farm subsidies to foster cheap and abundant food (not so sold on the national defense argument), I’m hesitant to rely on higher prices as the sole mechanism for reaching equilibrium. Yes, it in conflict to my normal bias to free enterprise. But it is in concert with my preferential option for the poor.

  22. Troy Jones

    P.S. Unless I’ve told you privately, nobody here at the SDWC knows my position regarding ethanol subsidies. Frankly, while I have a position, it is fluid because I’m trying to gain knowledge filtering out bias and agenda of people on all sides of the issue.

    1) I get the positive parochial impact it has on South Dakota farmers.
    2) I get the environmental argument for ethanol as well as the environmental argument against it.
    3) I get the national defense/energy independence argument as well as the one which says it is contrary to our national interest.
    4) I get the economic argument for reduced trade imbalance (imported oil).
    5) I get the argument it is a good diversion of capital and inefficient diversion of capital (actually how one discerns the 1-4 helps with clarity on #5).
    6) What I don’t get is the apparent 180 degree turn among environmental liberals on the issue. For the first 20 years of the discussion, they were the most strident and vocal supporters of ethanol outside of rural America. Now they are equally strident and vocally opposed. None of the arguments have changed. Only their position.

    The problem is I haven’t synthesized all these arguments to reach a firm position on whether they are good, bad, or need to be tweaked in context of long-term benefit to our nation and the current budgetary challenge. Maybe I’m of dull mind or indecisive but I like to consider broad scopes of information/rationale before making a firm decision.

    1. Troy Jones

      No problem. And despite Moses thinking we are far apart and you are spinning circles around me, I know, while our position may be slightly different, our rationale is pretty similar.

  23. Name

    I commented about 4000 comments ago and just checked back and the amount of “professional economists” reading Dakota War College is phenomenal. Since I stayed at a Holiday Inn Express last night I will offer another opinion.

    If we get rid of the subsidy for ethanol we should get rid of all subsidies and truly level the playing field. Can someone list for me a form of energy that isn’t subsidized along the supply chain? Oil companies receive $15-$35 Billion a year in subsidies. If we are going to drill baby drill then should oil companies continue to receive subsidies? If oil is over $100 a barrel is it fair that oil companies receive subsidies? Is it fair that the government is picking oil to be a winner? All of this “outrage” over ethanol should be directed at the government’s comprehensive policy on energy.

    I would prefer no subsidies but if I have to choose between ethanol and oil I would rather choose subsidies for SD over Iran. I would also prefer if we drilled our own oil. However, if we drill our own oil and continue to subsidize it then I still prefer subsidies for SD over subsidies for Texas.

    1. DDC

      Your $15-35 billion number is completely fabricated. The real number is about $4 billion a year. Ethanol gets about $6 billion a year.

      And yes, we should eliminate all subsidies for all forms of energy production. They create market distortions that lead to business decisions not based on science or economics but on what companies can do to best get government money.

      1. duggersd

        $15 – $35 billion or $6 billion. What do oil companies pay in taxes each year? I saw one figure of $138 billion in 2006. Kind of dwarfs that “subsidy”, doesn’t it? Also how much is collected every time you buy a gallon of gas as opposed to buying ethanol laced gasoline?

  24. Troy Jones

    Discussions like these revolve around the question if a government induced policy is a subsidy or an incentive to fulfill a public policy goal?

    Is a tax credit to a power company to develop 10% of its electricity from wind a subsidy or an incentive to use less coal?

    Is a consumer electrical rate break for installing a thermostat that regulates drops energy usage during peak power demand periods a subsidy or incentive to reduce energy usage?

    Is a gas tax refund to an ethanol company a subsidy or incentive to produce a fuel from non-fossil sources?

    Is a farm price support payment a subsidy or an incentive to grow a crop deemed important to the food chain?

    Is a domestic exploration tax credit to an oil company a subsidy or an incentive to find/develop domestic sources of oil?

    Is a merit-based scholarship a subsidy or an incentive for the brightest to get a college degree?

    Is discounted medical school tuition a subsidy or an incentive to practice in a rural area?

    Is student loan forgiveness for teaching on a reservation a subsidy or an incentive for teaching on a reservation?

    Is a tax credit to auto companies for making/selling hybrids a subsidy or an incentive to reduce gas consumption?

    One person’s subsidy is another person’s incentive to effect economic behavior to fulfill a public policy goal.

    1. Name

      Troy,

      I get what you are saying; it is a matter of semantics. Does cow crap smell like crap, or money? Depends on what one isgoing to do with said crap.

  25. MOSES

    Troy you mean well, but we as the U.S can not afford all this any more we need to take care of veterans, our seniors and children everything else has to go.

  26. The Truth

    Policy of domestic fuel, rural America, domestic economy, national security…and all aside….let’s say we all hate ethanol.

    The economic reality is that there’s a big difference between subsidies and tax credits. Ethanol gets a credit not a check. If we remove the ethanol tax credit, the congress would be raising taxes unless it found another tax to decrease. If it didn’t decrease another tax it’d result in a net tax increase. On consumers. At the gas pump. I know that’s hard to understand and the beck kool-aid drinkers can’t deviate from their speaking points – but that’s how the economics work. That’s how those dummies at the congressional joint tax committee see it anyway. D’s and R’s. Or, ask Grover Nordquist if that’ll assist.

    The policy discussion is fine. Either have incentives or not (for everything) – but come on, apply some economic logic and a bit of intellectual truth.

  27. Les

    Gas pump increases without ethanol subsidies equals net increase of how many dollars?

    As much as the extra dollars in food is costing the consumer now? As much as the loss of income for the feeder calf producer? As much as the billions Monsanto is taking out of the kitty with their vertical market that controls the very germination of the seed we produce? As much as the cost to our nation for the years wasted while the public is duped into thinking we are really on to something?

    Intellectual truth? Tell me more!

  28. The Truth

    Les,
    The tax increase would be $4.869 billion dollars.

    So…. it’s ok for the government to subsidize $2/bu corn so feeders and grocery manufacturer’s can have cheaper inputs? How much field corn do you eat at your house? Starch makes ethanol. The protein is put back into the food supply….for feeders.

    Reduce competition for a commodity so others can buy that product below the cost of production and make the taxpayer cover the loss for the farmer? Sure, that’s conservativism.

    Nope, don’t think that’s intellectually honest and still economically incorrect.

  29. Les

    Truth@””4.869 billion dollars””…….4.869 billion dollars wouldn’t wipe Mansanto’s *ss compared to the dollars that industry is taking out of our food industries pockets while they destroy our land and our food products.

    Truth@””So?. it?s ok for the government to subsidize $2/bu corn so feeders and grocery manufacturer?s can have cheaper inputs?””……… How does my argument to eliminate ethanol subs take you there? If Ford builds too many Fusions, the price will have to come down. You do not seem understand, that Monsanto and a relatively few farmers are the only ones making the dough here.

    Truth@””How much field corn do you eat at your house? Starch makes ethanol. The protein is put back into the food supply?.for feeders.””…….Again you do not understand or accept, corn byproducts are the main consumption by humans. Hogs, poultry, beef, dogs, cats, and other various animals are the consumers of corn for the starch and what protein it shares. Soy Beans is the crop with the protein for our livestock protein needs.

    Yes starch makes ethanol at the rate of 131,000 btu’s of fossil fuel input for every gallon produced while that gallon of ethanol produced has an energy value of only 77,000 btu’s. Why don’t the ethanol plants use their own product for an energy source?

    Truth@””Reduce competition for a commodity so others can buy that product below the cost of production and make the taxpayer cover the loss for the farmer? Sure, that?s conservativism. “”……………This statement is so much hogwash I can hardly begin to respond. Corn is a product that is being overproduced for its real needs and it is hardly the taxpayers job to fund profits for irresponsible over production by anyone in any business.

    Truth@””Nope, don?t think”” ………..Nope, you sure don’t.

  30. The Truth

    Ok, I get your policy position. That’s fine. And, you hate monsanto. Really hate monsanto. Personally, Pioneer seems a little less offensive to me. Try it.

    I’m saying the economics don’t work as advertised. If you simply cut ANY tax credit, all you do is raise taxes. There’s no “new” money by eliminating a credit. And unless the congress cuts another tax – it’s a net tax increase. Can we agree on the economics behind a tax credit??? Or do you ‘not understand or accept’ the reality of governmental budgeting?

  31. Les

    I understand the econ behind a tax credit. My point with you Truth, it matters not how the fed gov operates or has operated, it will change, either voluntarily with some direction from us, or desperate measures will be forced upon us by a desperate government as this current system continues to fail.

    Our country needs more revenue and cutting tax credits and spending while raising taxes may not or should I say will not cover the interest on our national debt with with just a couple more points + on interest which will come as Asia continues buying us out. The national debt does not include state and personal debt which has us bankrupt without any increase in rates.

    We cannot continue to spend dollars into existence as the feds and states have done.

    I prob need to cool my jets on arguing over failed policy, I’m guessing change will continue and it won’t be the change that should have happened long before this mess.