General Wesley Clark and Congressmen Bruce Braley have teamed up with a Huffington Post op-ed to remind Americans that they still want you to care about those darned oil imports (we also import olive oil).
Right now, the United States has an addiction to foreign oil — an addiction that is not only crippling our economy, but is also funneling hundreds of billions of dollars to foreign governments and corporations. It’s the biggest problem in America that no one seems serious about discussing and solving.
Part of breaking that habit is acknowledging just what kind of problem we have, and who benefits from it. That’s why we’ve been working together to build support for country-of-origin labeling at the pump — so that we know where that $4/gallon is coming from, and move beyond acknowledging our problem to solving it. [click to continue…]
The non-profit Chicago Council on Global Affairs this week gave the Obama administration a B-minus grade for its progress in furthering food security in poor countries, according to a story in today’s ClimateWire (subscription required).
I do not understand how any rational foreign policy expert could award the Obama administration a B-minus for its performance on global food security. This high a score is possible only if the U.S. was graded on a curve with North Korea and Zimbabwe.
During the period under evaluation by the Chicago Council on Global Affairs, America’s Soviet-style production quota for ethanol, a motor fuel distilled from corn, increased almost 4 billion gallons, or 104 billion pounds of maize. This year American farmers will dedicate about a third of the U.S. corn crop—the largest in the world—to ethanol. As I explain here, here, and here, this massive distortion pushes up the price of foodstuffs on the global grains and oilseeds market, which harms urbanites in developing countries. Simply put, our stupid ethanol policy is one of the greatest threats to food security in the world today, if not the greatest.
[click to continue…]
In announcing his intention to seek the GOP nomination in 2012, Tim Pawlenty visited Iowa yesterday to deliver so-called “hard truths” to the American people. Given that he was in Iowa, Pawlenty’s stance on ethanol is the perpetual elephant in the room. Most non-Iowan fiscal conservatives seemed happy with Pawlenty’s comments, though its not clear why. The WSJ, today, wrote a short op-ed praising the Pawlenty for his unprecedented, “amazing” steps in Iowa:
One of the immutable laws of modern American politics is that no candidate who wants to win the Iowa Presidential caucuses can afford to oppose subsidies for ethanol. So it’s notable—make that downright amazing—that former Minnesota Governor Tim Pawlenty launched his campaign for the Republican Presidential nomination Monday by including a challenge to King Corn.
I suppose its worth praising him for making a slight improvement to the Obama/Bush/Gingrich/*insert politician* doctrine, but it ends with slight. The “don’t pull the rug out from under them,” slowly-end the subsidy approach isn’t a real stance, and its not an end to the subsidies. [click to continue…]
1. Ethanol Mandates: In an effort to further “energy independence,”* major agricultural producing countries have enacted Soviet-style production quotas for ethanol, a motor fuel distilled from food.
This year, about a third of the U.S. corn crop will be used to manufacture 13 billion gallons of ethanol. By law, that will increase to 15 billion gallons every year after 2015. The European Union mandates that ethanol distilled primarily from palm oil and wheat, constitute an increasing percentage of the fuel supply, ultimately 10% by 2020.
Global ethanol production is a new and tremendous source of demand for food that has had a significant impact on the price of grains and oilseeds. According to a report commissioned by the World Bank, global demand for fuels made from food accounted for nearly 70% of the historic price spike in wheat, rice, corn, and soy during the summer 2008.
2. Rainforest Protections: Burning rainforests is an important link in the global food supply chain. In Brazil, farmers are clearing the Amazon rainforests to meet rapidly growing global demand for soybeans. In Indonesia, they slash rainforests to harvest palm oil seeds for export to Europe.
[click to continue…]
On E&E TV. The title mistakenly claims that the NCGA supports ending ethanol subsidies, which they don’t. They are willing to give up a specific tax credit in exchange for different government subsidies or incentives to continue lining their pockets with taxpayer dollars by encouraging ethanol production.
Rick Tolman, the CEO, discusses the reasons the corn industry has come under attack, noting that they have moved into selling a lot of corn for ethanol production. He kind of hides the whole reason for this, which are the corn ethanol production mandates, preferring to vaguely refer to “productivity improvements” which allowed them to also begin exploring additional markets. Unfortunately, markets are blind to everything except prices, so if the mandates had been stringent enough, corn would be converted to ethanol even if we weren’t producing enough additional corn to meet other needs.
He also notes that the oil industry is very upset that the ethanol industry has taken about 10% of their market. Well of course they’re upset, as they should be. There’s no other industry (energy) in America that I can think of which is so heavily reliant on government policies for their existence. Imagine if the government began requiring that 10% of your daily calories come from Starbucks? Isn’t it reasonable that every other food industry (to say nothing of citizens) in America would be justifiably furious? Note that ethanol already has its own E-85 market through flex-fuel vehicles, and its very small, because ethanol is more expensive than gasoline. [click to continue…]
In an appearance on E&E TV, retired General Wesley Clark discusses the future of corn ethanol policy. Transcript here. Given that he is a member of Growth Energy, completely objectivity isn’t expected. However, he makes a number of incorrect statements and supports very poor economic analysis.
CLARK: And so we’re behind in cellulosic because we’ve been artificially constrained in the fuels market, first by the EPA blend wall at 10 percent, which meant there was no market for cellulosic. And then secondly then by the lack of infrastructure to be able to actually go out to the service agent and say, hey, I want to try 20 to 30 percent ethanol blend.
Cellulosic ethanol production is “behind” because its not economical, and investors are aware that the current market for cellulosic ethanol relies almost entirely on a government law that clearly isn’t guaranteed given how difficult it is to produce cellulosic ethanol at a price that is even close to something consumers would want.
Clark also complains about the 10% “blend wall” yet doesn’t acknowledge that the majority of ethanol sold is due to an “artificial” government mandate. I’d gladly end the EPA’s ability to determine what American’s can put in their gas tanks just as I’d gladly end the mandate requiring refiners to blend petroleum with ethanol.
[click to continue…]
Via Steven Mufson at The Washington Post.
Black liquor is a by-product of paper production and much of it is burned in house at the paper mills to produce energy. Note that these companies need no incentive to do this as they already have been doing it on their own for quite a long time as its an efficient way for them to produce their own energy. This was an issue in the past, which Congress had theoretically fixed, but as the article notes:
Eager to limit the cost to the Treasury — more than $4 billion by the end of fiscal year 2009 — Congress said that black liquor would not qualify for the alternative fuel tax credits after Dec. 31, 2009. And to help cover the cost of the January 2010 health-care law, Congress also barred black liquor from qualifying for the cellulosic biofuel tax credit.
But the story didn’t end there.
Last year, the IRS said that the provision in the 2010 health-care legislation didn’t prevent black liquor produced in 2009 from qualifying as a cellulosic biofuel, so the paper industry got its calculators out again. The cellulosic biofuel tax credit, part of the 2008 farm bill, is worth $1.01 a gallon.
I can understand how this might happen initially. Laws are written vaguely and companies take advantage of a law not intended to benefit them. This is frustrating in and of itself, but given the complexity of our tax code its bound to happen sometimes. However, the fact that our laws are so complicated that Congress tried, and failed, to fix this loophole is beyond belief.
[click to continue…]
From The Center for Public Integrity:
According to IRS records, the ethanol group Growth Energy paid Gingrich’s consulting firm $312,500 in 2009.The former House Speaker was the organization’s top-paid consultant, according to the records. His pay was one of the group’s largest single expenditures, as it took in and spent about $11 million to promote ethanol and to lobby for federal incentives for its use.
In a Growth Energy publication, Gingrich was listed as a consultant who offered advice on “strategy and communication issues” and who “will speak positively on ethanol related topics to media.”
Chris Thorne, a Growth Energy spokesman, said Gingrich was not hired again in 2010. The group was organized by ethanol producers from the Midwest in late 2008, Thorne said. Its members sought Gingrich’s counsel when it started because “they were people who were never involved in DC politics before, and they were looking for someone who knew how to get things done.” The organization’s IRS report for 2010 is not yet available.
First, the idea that Growth Energy doesn’t have anyone who is familiar with DC politics is laughable. The CEO of Growth Energy is Tom Buis, formerly the President of the American National Farmer’s Union, and named one of D.C.’s top 50 lobbyists. They also employ (or have employed) General Wesley Clark and Jim Nussle.
Do recall Newt Gingrich’s scuffle with the WSJ earlier this year, where in a letter to the editor Gingrich wrote:
Second, I am not a lobbyist for ethanol, not for anyone. My support of increased domestic energy production of all forms, including biofuels and domestic drilling, is born out of our urgent national security and economic needs.
Turns out that wasn’t true. CEI has previously written about Gingrich’s shameless ethanol pandering here and here.
The ethanol industry has found a friend — the US Department of Agriculture. The industry will be less reliant on new legislation to encourage ethanol consumption, thanks to a new USDA announcement that the department will begin funding grants and loan guarantees for gas stations that choose to install new E-85 blender pumps. This was one of the primary legislative goals of the renewable fuels lobbyists.
The funding for the program will be provided by the 2008 farm bill which included funding that can be used to promote renewable energy development. The total fund amounts to $70 million in 2011 and another $70 million in 2012.
From the article:
Most gasoline sold in the U.S. is 10% ethanol, but a growing fleet of flexible-fuel vehicles can run on an 85%-ethanol blend, or E85. However, there are fewer pumps available to dispense it, Mr. Vilsack said.
In the U.S., only about 2,350 fueling stations out of more than 110,000 offer E85 pumps, according to the USDA.
It’s obvious why gasoline retailers are hesitant to install E-85 pumps, adjusting for energy content its not a better deal than gasoline.
When really pressed on why the USDA and the Obama administration continue to support corn based ethanol, they point to using it as helping support the fledgling cellulosic ethanol industry, which seems to always be just 5 years away from commercial viability.
The Senate is expected to vote on S. 520, a bill to repeal the 45 cents per gallon volumetric ethanol excise tax credit (VEETC). The bill is co-sponsored by Sens. Tom Coburn (R-Okla.) and Benjamin Cardin (D-Md.). Sens. Diane Feinstein (D-Calif.) and Jim Webb (D-Va.) have also introduced S. 530, which would limit the VEETC to “advanced biofuels,” thus ending the subsidy for conventional corn ethanol. S. 530 would also scale back the 54 cents per gallon ethanol import tariff commensurately with the reduction in the tax credit.
The VEETC adds about $6 billion annually to the federal deficit. Unlike many other tax credits that reduce a household’s or a business’s tax liability, the VEETC is a “refundable” tax credit. That means the VEETC is literally paid for out of the U.S. general fund with checks written by the Treasury Department. The protective tariff, for its part, prevents lower-priced Brazilian ethanol from competing in U.S. markets. It increases the price of motor fuel at the pump.
Now, you would think supporting S. 520 and S. 530 would be a no-brainer for conservative lawmakers. But some are reportedly getting cold feet. To remind them of their duty to put the general interest of consumers and taxpayers ahead of the special interest of King Corn, I offer the following observations. [click to continue…]
RSS Updates 
RSS E-Mail Updates 
CEI.org