It's Now 'Official': Ethanol Is a Scam

Paul Krugman in the NY Times, "Grains Gone Wild":

Where the effects of bad policy are clearest, however, is in the rise of demon ethanol and other biofuels. The subsidized conversion of crops into fuel was supposed to promote energy independence and help limit global warming. But this promise was, as Time magazine bluntly put it, a “scam."

This is especially true of corn ethanol: even on optimistic estimates, producing a gallon of ethanol from corn uses most of the energy the gallon contains. But it turns out that even seemingly “good” biofuel policies, like Brazil’s use of ethanol from sugar cane, accelerate the pace of climate change by promoting deforestation.

And meanwhile, land used to grow biofuel feedstock is land not available to grow food, so subsidies to biofuels are a major factor in the food crisis. You might put it this way: people are starving in Africa so that American politicians can court votes in farm states.

OK, now that Paul Krugman's on board by coming out against ethanol, it's now official: Ethanol is a complete and total scam.

Anytime you have Paul Krugman agreeing on ethanol with such a diverse group as the WSJ, Reason, Magazine, the Cato Institute, Investor's Business Daily, Rollingstone Magazine, Christian Science Monitor, the New York Times, John Stossel, The Ecological Society of America, the American Enterprise and Brookings Institution, the Heritage Foundation, George Will, and Time Magazine, you know that ethanol has to be one of the most misguided public policies in U.S. history.

So who is left out there supporting ethanol? You sure won't find very many scientists, economists, policy groups, or editorial page contributors. But, ethanol has been very, very good to corn farmers and ethanol producers like Archer-Daniels-Midland (ADM), the largest producer of ethanol in the United States. ADM stock has quadrupled over the last five years, from about $10 to about $40 per share, and increase of 300%, while the S&P has only increased by about 50% during the same period (see chart above).

Disclosure: no positions

Comments

[pk de cville]

Boy, this one is one for the record books. Policy and laws driven by ADM and ag state politics. Stinks to heaven.

Being optimistic, maybe our political leaders will take this lesson to heart and notice the impact of the next lobbyist driven policy initiative.

Also, being optimistic, maybe this is the price we pay, as a country, when the leadership at the top is woefully not close to being up to the job AND maybe, whoever comes next, John, Hillary, or Barack, will return us to a government based on reason, goodwill, competence and integrity.

Our 8 year long experiment in 'faith based' leadership is soon, thankfully, coming to an inglorious end.

[User 162922]

No, that's why the French have the saying, "Plu cest change, plu cest le meme chose." Political Science 101-A politician's most important job function is to get re-elected. Neither party will change their policy supporting ethanol until after the election because of the votes. I'd bet you'd find ADM's political budget split relatively evenly between the parties.

[Britishsteel]

Baaaaaaa baaaaaa baaaaaa all you sheeple LOL everything in this country seems to be a scam

[Chungst]

Check out this link: www.coskata.com/ProcessAdvantages.asp

Coskata claims:
"Environmentally superior - The Coskata process reduces carbon dioxide emissions by as much as 84% when input materials such as grass, agricultural waste or woodchips are used (Argonne National Laboratory). The Coskata process has no back-end solid waste to dry and handle like enzymatic approaches, and water and wastewater treatment requirements are low due to significant water recycle and energy conservation. The Coskata process uses less than one gallon of fresh water per gallon of ethanol produced, versus 3-5 for corn, and as much as 7 gallons of water per gallon of ethanol for enzymatic routes."

"Lowest cost target in the industry - Coskata's process delivers the next-generation of ethanol at the lowest cost target in the industry - under US $1.00 per gallon."

The company is in a partnership with GM.

[haydete]

The salvation is when ethanol can be cheaply produced from things other than corn (i.e. the corn husk and other previously discarded material.) The ethanol from corn mandate was too specific and technically easy. At least part of the infrastructure is now in place.

[huskerbob]

Sorry, but ethanol isn't causing starvation in Africa. Corn prices have risen so much that they will soon be paying ten cents per pound. OMG! How can anyone afford to eat when corn is a whopping ten cents a pound! I guess the few farmers who are left can. Not sure if you noticed but the prices for all ag inputs have more than tripled in the past few years. Only a few years ago the price of corn was at it's lowest point in US history(inflation adjusted).
This is all beside the point. People will still eat corn at 15 or even, god forbid, 20 cents a pound. But there won't be a single ethanol plant operating at those prices.
And for the record, I agree: yes,ethanol from corn is so stupid that it borders on criminal. But no one is being priced out of eating because corn is $6/bushel. I am getting sick of hearing people bitch about the price of groceries. There is 8 cents worth of corn in a $4 box of corn flakes, and less than 10 cents worth in a pound of tortillas! You can't have ridiculously cheap food for all eternity!

[NumbersGuy]

Come on huskerbob, tell that to rioting Mexican housewives who have seen tortilla prices go through the roof. Remember an increase of 10 cents per pound can have a huge impact on someone living in poverty in the developing world. It may not matter to joe sixpack in the US, who should probably drop a few pounds anyway. But to a large part of the world that increase does matter.

(I guess the problem to a large extent is that we have Sunilsixpack and Xaiosixpack competing with Joe for hamburgers, but that's another point.)

[Red Baron]

While it is true that the grain ingredient cost of a box of cereal is just a tiny portion of the purchase price, this argument ignores the effect of the increase in transportation costs, that subsidizing ethanol has helped produce. By hanging our hat on the ethanol hook, we have gone in the wrong direction, and contributed hugely to the increase in transportation costs.......just as we did in the 1970-80's. We tried this dance once, and it didn't work then. Why were we not intelligent enough to realize that unless there was some significant new technology to contribute to lowering overall costs, this was doomed to failure again? The first commentor, 'pk de cville', said it all, and best. It is now time to use 'intelligence based' initiative to start to solve this problem.

[AlternativeFuel]

Nothing, nothing is worst than having someone who is totally ignorant on a subject, write about that subject. The fact that you have a PhD next to your name, doesn't mean that you are qualified to talk about any subject. Yes, producing ethanol from corn is idiotic, as the yield if made with sugar cane, would be 7 times higher. No, ethanol is not a scam, and no, it is not the cause of deforestation in Brazil. Have you ever checked the areas in Brazil where they grow sugar cane? Go do your homework, come back and apologize for your misleading statement. Ethanol from sugar cane is one of our best alternatives to decrease our dependance on oil. We could grow sugar cane in areas of Texas and Louisiana, and remove tariffs to bring oil from the Caribbean region, instead of importing oil from Arab countries and Venezuela, who hate is.

[johnrich]

Write your congressman - a joke! On 1/31/07 I sent Lugar & Hill, my men, a letter outlining this mess we're in now - and the inflation is just starting. Wait a few more months until the grain fed meat products cycle into the stores and restaurants! The international relief agencies are already out of funds so those starving numbers will jump out of sight. Ah well, the wars must go on!

[Tim Plaehn]

So we are responsible for feeding Africa. Maybe they could learn to grow their own food!

Right now ethanol reduces our gas consumption by about 4%. It supplies jobs for 1000's of people. Farmers are making good profits and buying machinery, supplies, cars & trucks. Too bad this "scam" provides a good living to so many people!

[ladders11]

It is, of course, a scam, when you're promoting domestic corn ethanol and imposing prohibitive tariffs on imported sugar cane ethanol. The stated justification for ethanol doesn't mesh with the policy of impairing the easiest way to produce it.

[wayneS]

I bought "gasohol" in the seventies on the promise it would free us from foreign oil. In college, we were converting carbon dioxide and hydrogen into methane. It was deemed uneconomical and besides carbon dioxide was crucial to earth's carbon cycle. Without CO2, the earth would go into another ice age.

[AlternativeFuel]

Check this: www.setamericafree.org/wordpress/?p=378

[huskerbob]

Tim - any solution that helps reduce dependency on foreign oil will provide 1000's of jobs and free up money for spending on items other than fuel. So why not decide to give the tax breaks to a process that is actually efficient and sustainable? All of this arguing is a moot anyway, as eaters can easily outbid fuel producers for corn, beans, or any other popular food to fuel source. Ethanol from corn and soy diesel will soon be strangled by their own inefficiency and better sources of fuel (landfill waste, camelina, sugar, etc). Unless gas prices keep soaring:(

[huskerbob]

In defense of ethanol, when we started our local plant, no one wanted our corn, and you couldn't give wheat away! No farmer I knew forsaw a future of food shortages and high prices. We thought it was a good way to help America, ourselves, and fight Cargill and ADM (who later sabotaged and bought out our plant for a song).
I think now many farmers (out of the few that are left) realize that ethanol is not the best long term solution but they are desparate not to return to hanging on by their fingernails year after year.

[DrCanDo]

Ethanol is a renewable fuel. A bushel of Corn for $6.00. Omigod. Except a bushel of corn is 50 pounds of shucked kernels. Could you? Would you grow 50 pounds of shucked corn kernels for $6.00. Yikes, pretty soon we might be able to stop subsidizing farmers! If you don't like Ethanol, how can you support solar, etc which take more power to make than they produce in their useful life. Biodiesel and Ethanol are good alternatives for fuels to put in our fuel tanks and will get more cost effective as oil prices go sky high. We could just keep liberating countries that have oil, but the world is running out of oil.

[nerfer]

One thing people forget is that ethanol improves emissions, now that MBTF (?) has been shown to easily contaminate groundwater, so it does have a purpose. But we desperately need to put R&D into cellulosic ethanol instead of tax rebates to big oil and coal! That's just insanity, but Pres. Bush continues to cut funding for clean energy, despite his talk. We're coming up on peak oil, and this is imperative for our economic future! Not to mention we need to quit funding both sides of the war in Iraq.
DrCanDo - how do you think solar doesn't have a positive EROEI? Can you provide something to back up a statement like that??

[The.Gibbon]

I am writing this in answer some of the debates going on around ethanol at the moment and provide some facts, most of this is mis information coming from research paid for by the oil companies, see TIME last week.

Most research companies who are looking into cellulosic are developing either specific enzyme mixes, chemical processes, a combination of both or micro organism based maceration of the cellulose. NOTE. these companies may develop the technology but they will license it. What is important is the infrastructure to distil the mash and then distribute the ethanol. VSE is in a great position to benefit from this because it has scale and the infrastructure. In addition, Vse is part of a JV which is working on Cellulosic using micro organisms this is medium to long term.

In terms of biodiesel the two primary plants will be on line end 2008 and will help reduce the impact of the corn price giving VSE two revenue streams from one raw material, putting VSE in a strong position.

Finally, corn will come down soon, $6 is a silly price and not realistic, the food verses fuel debate is not real it is being fuelled by the oil companies, look at who bankrolled the article in TIME last week.

The real issue is Energy security, the more ethanol from USA corn in your tanks the less dependant the USA is on foreign imports. This is a no brainer as oil will go up as the middle classes in India and China grows (see India/China automotive growth targets for next 5 years links at bottom). In addition it keeps USD in the USA, this is why Brazilian ethanol is also not a good solution. Every percent of ethanol from USA produced corn in the tank of a USA driver means that money is being retained in the USA economy and that the country is less reliant on foreign imports, don’t be surprised at E/20 at a station near you in the few years.

What I predict will happen is the business will be built using Corn, this will pay for infrastructure. Then more effecient methods of ethanol production will be developed (cellulosic for example) and this infrastructure will be put to work. Production prices will come down and profits will go up.

FACTS DATA LINKS

China is increasingly concerned about an escalating dependency on oil imports. About a third of China demand is met by imports, projected to rise to the American level of 55 percent by 2030. Just a decade ago, China was a net oil exporter.

Link to presentation on India automotive component industry growth acmainfo.com/docmgr/Status_of_Aut ...

Morgan Stanley Auto and Auto Parts Global Insights www.uscc.gov/hearings/2004hearing ...

Crude oil price increases since 2003 (graph 1994 – 2008 should be the trend setter) en.wikipedia.org/wiki/Oil_price_i ...

Petroleum Life Cycle of 42 countries dieoff.org/42Countries/42Countrie ...

EIA International Petroleum Monthly www.eia.doe.gov/ipm/supply.html


SUMMARY

Ethanol from corn is not the answer alone, it is a first step.
Ethanol is not that environmentally friendly, but more so than oil, and that isn’t the point anyway.
Energy security is the key issue
Oil prices are NOT EVER going to come back down to 40 or 50 USD per barrel, they will be driven up even further because…..
Demand is increasing and will outstrip production and will continue to do so.
In the end oil prodution will decrease and until it is gone, some people say this started to happen in 2006 some say in 2012 I don’t know but it will definitely happen.
Look at the company NOT the corn from ethanol debate and see if you think the company is best positioned for the future

DISCLOSURE

It is in my interest to pump this company as I own stock however facts are facts, I am a private individual and not a day trader I am based in Europe and am English.

[jescott418]

Americans are always quick to embrace a well sold solution. Who could complain about something that would help the farmer's. Except for the fact that it would backfire on everday consumer's who end up paying more for food and still have high gasoline prices. Has it really helped anyone but the farmer's and ADM???

[techzone]

Some people made a lot of money out of this scam I bit you. We are having an Ethanol boom, now we need to wait for the bust (it's the norm these days).

[John F.]

And it must have really hurt Krugman to fess up, since his candidate's campaign (Hillary Clinton) is now partly funded by Ron Burkle's ill-gotten proceeds from the ethanol scan (via Bill Clinton's business interests).

[Warren Buffert]

"Ethanol has to be one of the most misguided public policies in U.S. history."

Iraq, anybody??

[Shendandoah]

This article is so sad, yet so typical. The only numbers it offers to make its point is that ADM stock has beat the S&P and a listing of unqualified references. As if a group of journalists, and anti-government ideologues are qualified to call bio-fuels a “scam”. This is in direct contradiction to the amazing progress being made worldwide by the combination of biotechnology and agriculture. Missing are the hundreds of other studies by more technical organization that point out biofuels is the only game in town for short and medium tern results..

To make it worse there is not even a mention of the favorable results already reached in 2007; i.e. the reduction in oil imports because of the over five billion gallons of ethanol fuel created and the savings in grain subsidies due to a rejuvenated agricultural sector. All the author and his reference offer are imaginary anecdotes in which a fivefold increase in petroleum fuels cost are not mentioned yet the current small amount of biofuels are blamed for everything imaginable. There is no mention of the cost of doing nothing- like the complete destruction of our economy due to a half trillion-import cost of petroleum.

It is also amazing how many people feel that reading misleading headlines qualifies them to repeat the misinformation. You really have to dig a little behind the journalistic opinions to contribute to an intelligent discussion. I suggest your read “Energy Victory “by Bob Zubrin as a starting point.

[bouzerdad]

Who is for Ethanol?... Everyone that wants to get drunk. I don't think that volume is decreasing. I look at fuel usage as an added perk for those stocks or contrarily, booze is an alternate venue should those manufacturers look for other uses. Ethanol won't go to waste.

[Is thisRight]

Bravo, for the 'scam' story. Let's turn off ethanol and buy more oil, while we go wild on using more gasoline!

What is your alternative plan, Mr Perry, PH.D?

[Call It As I See It]

This is the STUPIDEST article I have ever read.

I used to live next to a cornfield. The oddest thing is that after every year's harvest, the farmer's field had new corn.

You've got a PhD and you're writing about deforestation? Corn grows quickly annually. It's not the same thing as knocking down redwoods and the area is replenished with crops.

As for pricing out farmers and consumers from profits and affordable food, what part of growing demand will encourage more production for the next year?

Disclosure - He doesn't own stock in any of the mentioned stock. Which oil stock does he own?

[buyitcheap]

Decreasing existing coal plant emissions would be where I'd start, far greater impact, much more quickly.

We need a JFK style Man on the Moon initiative (forget the Mars garbage) for nuclear and clean coal. Build 50 nuclear plants and create the technologies (which are almost already there) for scrubbing the coal plant emissions. You'd have greater impact and lower cost, but then again, lower costs never bought the votes of entire regions of the country did they.

And then electric cars.

[crowdofcheerleaders]

If ethanol is so great, why am I and everyone else paying for the industry to stay afloat? How about we stop paying for it, and let's see where it goes..

[Simbabili]

Deforestation does not come from cutting down corn you Dumb ass. Deforestation comes from cutting down trees to make room for more corn as the demand and prises skyrocket.

[crowdofcheerleaders]

Oh, also, since ADM received >$10B of taxpayer money since subsidies began:

do taxpayers get a portion of the patent revenue from patents that ADM received using our money? this whole thing is seriously illegal, and it's really pissing me off.

[pockyclips 2020]

What about water? Corn is a very thirsty crop to grow, and then it takes lots of water to process corn to ethanol. Didn't I here something about a water shortage? Just because we have 1 wet winter, does not mean the drought is over.

Red states rule! Nothing short of an act of God is going to put the brakes on the ethanol freight train. Railroads & agribusiness have too much clout.

The one thing we Americans can outproduce anybody in is waste.
Landfills are filling up, and no one wants them in their backyard. We're supposed to be the most creative people on the planet.
Instead of treating this as an expense, think of it as getting in on the ground floor.

[AviGandhi]

Someone please realize that ethanol - CELLULOSIC ETHANOL - is a very good thing. Companies like Bluefire Ethanol can make the stuff from trash, food wastes, etc., reducing our landfill sizes and leading us to truly sustainable fuels. I mean, think about it. Those landfills are going to decompose anyways. Bluefire's plants use methane emitted from rotting trash as 70% of their total energy use. The company takes the paper, eggshells, corn husks, tree leavings, and other crap that we could use but instead throw away and break it down, ferment it, and turn it into a fuel that could drive our country. The best part is that it harnesses a source of energy (rotting trash) that otherwise goes to waste, and it uses yeast for the fermenting process - way more efficient than corn.

I hope people eventually stop talking about how bad "ethanol" is and start talking about how bad "food-based biofuels" are. Fortunately, you don't need food to make all biofuels - and it's these energy sources that will revolutionize our society.

[crowdofcheerleaders]

Take a freshman course on micro/macro economics, study the ethanol industry, and come back to the thread. Tell us how great your cellulosic ethanol is, then.

[Moses]

The deforestation that is usually referred to when talking about biofuels is that of the Amazon which contains so much carbon it will take many decades for biofuels to pay off the huge release of it into the atmosphere. As corn prices rise, more farmers move to corn in the US and out of other crops like soybeans, then soybeans go up because of a fall in supply leading Brazilian farmers to deforest the Amazon to plant more soybeans. There are much more efficient biofuel sources other than corn and it is a shame that Congress in their infinite wisdom is passing laws requiring increases in the production of corn ethanol. I'de suggest people read National Geographic's article on biofuels from an issue last fall, it is a much more in depth study and has no political agenda.

[User 141585]

get a bicycle (from the Chinese), learn to plant a vegetable garden (from the Cubans), sell your index funds (and reclaim your freedom).

[Cousin A.]

AlaternativeFuel: Thanks for the reference to the particular article in setamericafree/org . I found both the article and the website very interesting in regard to the subject of this thread.

[Trader T]

Nuclear power is the best option for the future. Clean, green, and cheap.

[Donald E. L. Johnson]

For speculators, the questions are:

1. Will the Democratic National Committee and Republican National Committee wrest control of the presidential primaries from Iowa, or will that state be able to continue to black mail the rest of the country by forcing the candidates to pledge continued support of ethanol?

2. Will consumer anger over high food prices and rising inflation exceed their concerns about the environment, dependence on foreigners for oil an Al Gore's phony claims that humans are affecting global warming? What will be the tipping point between voters support of the ethanol farm subsidy and their demands that politicians relieve rising food prices and starvation in third-world countries?

3. John McCain is anti-ethanol, but Obama and Clinton swear by it. Will this be an issue in the 2008 general election, and who will win?

4. At what point will ADM and its ethanol-producing competitors decide that the future of ethanol is dim and begin cutting back on capital expenditures in ethanol plants?

5. Will coal and nuclear power gain followers as ethanol loses support, and when is that likely to happen? Don't hold your breath.

[wheels14]

Dear Red Baron,'

How is Ethanol increasing transportation cost?

[carbonates]

As a geoscientist who studies paleoclimate I have contended for years that the primary cause of global warming is not necessarily greenhouse gases and may actually be changes in land use. Consider how much of the northern hemisphere has been changed from forest to cropland over the last 100 years. Industrial agriculture has dramatically changed the planet, and the problem with both ethanol and biodiesel is that they create a powerful market that encourages more destruction of natural vegetation and converting it to cropland. Also consider that urban and suburban areas are known to create heat island effects. How much heat is absorbed by black roofing material, black road surfaces, etc, that is now radiated out into the atmosphere at night, instead of being absorbed by photosynthesis and used in convection? We don't know because it is very difficult to measure on a global scale. Experiments by NASA done in the Amazon have proven that changing from forest, or even grassland to cropland will cause local warming and reduced rainfall. Our problem is not what we think it is, and this is precisely why biofuels are more of a problem than a solution.

[CPhey]

And how much has Exxon and the rest of the "boys" received in subsidies????

[nerfer]

carbonates - that's an important consideration that is often lost. In addition, our changes to the landscape affect CO2 levels, as loss of tropical forests contributes nearly as much CO2 as does our use of fossil fuels, from what I've read (Conservation International has something on this). Global warming was also blamed for the big fires in California last year, but I think our century of artificial fire suppression (resulting in large build-ups of flammable material and flammable vegetation) had a bigger impact. I still think global warming is a serious long-term issue, only solved by peak oil and probably a population crash, but you're right, land-use is an important aspect.

[nerfer]

Trader T - nuclear is not cheap. Without government subsidies to build them, they would not be profitable. Uranium mining is hardly green. There are no simple easy answers, but making cellulosic ethanol profitable is a very important part of the solution.
User141585 - Get a Trek bike from Wisconsin or another U.S. bike company, they're scattered around (I like the range rider recumbent trike from Montana). Vegetable gardens are local, what grows in Cuba won't grow here. Maybe someday our lawns can be used for cellulosic ethanol, and be an energy source, not an energy sink.

[eamon]

well great article and true except for the point of people starving in africa. They will ALWAYS BE STARVING IN AFRICA, the natives are unable to survive without white people.
It may be poitically incorrect as the pc police say, however it is true.
Rhodesia used to export food under white rule now as Zimbawa they starve, case closed. Or is it some guy in the topekas fault?

[winslow]

Bush and his comarades have been one the scariest decision makers in our history. This administration was so gung-ho on ethanol and hydrogen. Ethanol was a complete mistake from day 1. Hydrogen is so far into the future to make it impractical. Have you wondered why scientists and experts were never allowed to help formulate policy?

[StateofConfusion]

The article asks, So who is left out there supporting ethanol? Well farmers (and I don't blame them) and politicians. The question is not if we need alternative fuels like ethanol but only how we obtain them. President Bush will leave this country on the verg of disaster is most areas.

Policies like letting 4 million legal and illegal immigrants come to the U.S every year (uncontrolled population growth), unregulated mortage industry, untaxed religion, exporting high paying jobs and even promoting diversity are the seeds of possible destruction of this country. Every resource is becoming in short supply but when have you heard anything about controlling population?

[SHartwell]

OK, forget the hype on the deforestation of the world. While it may or may not be true, you don't have to go there to demonstrate corn ethanol is dumb, and hurting America.

A simple energy balance shows that it takes almost as much energy to produce corn ethanol as is in the product. When you produce a gallon of corn ethanol, you use around 0.85 gallons of "ethanol equivalent" energy. So the "gain" from all that work is virtually zero.

Some of the energy use comes from the fuel for the tractors (etc.), and the energy to run the ethanol plant. In theory you could use the ethanol produced to run the tractor and the plant. But the rest comes from the energy to produce fertilizer. And this you can't get (easily or efficiently) from ethanol.

What's the main raw material for fertilizer? Natural gas. And what region is the biggest fertiliaer producer because of their huge natural gas reserves? The Middle East. Yes, there is natural gas in America, but if we divert this to fertilizer production all our home heating bills will jump just like our food prices already have.

So promoting ethanol production is merely promoting America's dependence on Middle Eastern natural gas instead of our dependence on Middle Eastern oil.

All with virtually no 'gain' here at home.

[REBEL]

We need to change our lifestyles - use less energy - unless we can find a 'magic' energy source that doesn't affect the environment. Even producing solar cells or windmills takes power and that must come from somewhere. An energy source that returns barely more energy than is used to produce it is only produced because government can rob taxpayers to pay for it, (a-la corn ethanol). Sadly, most of the world's citizens will not change their energy consumption habits until events compel them to do so. Two events on the horizon will force the issue. One is trading water for energy. I hope that most will choose water over energy. The other is food. Again, the logical choice is food. Food was fated to go up before corn was used for ethanol, (still a terrible idea). 6 & 1/2 BILLION PEOPLE wanting more food, (especially protein), might have something to do with that . When people have to use their money to feed their families they will fuel their vehicles less. HUSKERBOB is in the driver's seat as he grows and sells food, (unless the government intervenes in the free market as it did in Argentina).

[Plantinseeds]

LOL all of us here attacking each other over corn, ethanol, subsidizing, food and politics.
But then again here we are on a investments blog where we are out for ourselves trying to feed our greed for money.
We can make a difference on our need for oil. But we will have to give up our bass boats, party barges, house boats, 4 wheelers, 4x4 trucks, racing cars, Sunday after church drives and on and on.
Instead of trying to screw each other so we can get ahead, try and help each other so we can all stay above water.
Instead of complaining about the presidents and senators to each other, start holding them accountable for their actions or better yet inactions.
We think things are getting bad. I can promise you this, things are very good right now compared to 5 years from now.
Farmers, engineers, accountants, rich or poor we all have to make drastic changes in our lives. We all need to push the US goverment ( notice I didn't say our goverment ) to R&D all of the technologies and resources we have available for alternative energy.
Until we can say "love thy neighbor" instead of "screw thy neighbor"
and decide to make the goverment do what the founding fathers had intened it to do then we deserve what we have created.

In His Grace

[fxtrader07]

face it there are NO easy and convenient solutions to a very complex problem that mankind (not just americans) have built up over many decades. I do NOT advocate returning to cavemen-like lifestyle. However, severe and lasting cutback on energy consumption by private households, industry and govt is a must. NOW! And yes, it requires efforts and money and some sacrifices along the way. It requires not only cars taht use less fuel but it requires to use cars uch much less than is currently done. The same applies to airconditioning refrigerators, COMPUTERS! (ya know, the internet online gamers allover the world, for instance, use up tremendous energy. the internet itself is expected to use as much energy 23 years from now as the entire world population uses TODAY!) mankind has to learn and to understand that yes, there is a limit to growth and to satisfying eeach and every wish! 6 billion people (and rising) simply CANNOT have todays lifestyle of the leading world economies. It's about sacrifice, about cutting back, getting humble and find a different approach to living than ever-accelerating growth of each and everything. Or else we are all doomed. It's a very simple mathematical equation, actually, though solving the problems is complex and will take time and every dollar spent for subsidising idiotic non-solutions such as growing crops for fuel is a valuable dollar less for real solutions.

[dottowbird111]

I went to Brazil, and the Brazilians are very happy not having to import a drop of oil from terror countries or any one else, is has help the Ecomomy of Brazil, is an emerging market becoming a power house.
and the one factor Ethanol.

[Tim Plaehn]

A comment on the cutting forests to plant more corn to make ethanol argument. In 1932 the U.S. had 113 million acres of corn planted. Now the typical crop is 85 to 90 million acres. Who dug up the corn fields to plant trees?

Corn yield improve every year and strains are developed to increase sugar content. Ethanol plants are getting more efficient, more ethanol from less corn using less water and energy. It is the American way to improve business efficiency. Ethanol companies will do the same. And when cellulosic ethanol becomes economically viable companies like VSE and ADM will be the leading producers because the will have the infrastructure to produce billions of gallons at the lowest cost.

[rickrents]

I keep wondering how much EXXON etc pays these guys. Have you been to Brazil lately? Big oil is the scam

[bouzerdad]

Interesting perspectives. I am simply one of the greedy ones....I guess....that is determining if Ethanol is a good investment.
In the last five years demand has increased dramatically including government mandates. Future projection looks like a continued acceleration. (Disclaimer - I hold PEIX.) I look at the 5 year stock price and wonder why it had a perceived value of 36$ a few years ago and now sits between 4and 5$. Cost of production simply increases cost per liter. I don't see ethanol going to waste ever.

[done]

starving people in Africa. shouldnt be our problem, i could care less. the aid this country puts out is retarded, we got starving people here in the U.S. lets take care of our own first. Africa or any other country aint going to change a damn thing, just depend on us more to keep them alive. i am sick of it. they dont care about us, why should we.

At least all the money for ethanol stays in the U.S. not going to OPEC.

[done]

The subsidy for ethanol is a blending subsidy. who do you think gets that. I wonder why that is paid. who blends our ethanol with gasoline, wheter it is 10% or 85%. If you had to replace something you sold with not your product, wouldnt you want something for that? Thats what makes it tough for ethanol. our customer (gas companies) is also our competitor. That is why the govrenment mandates our necessary.

Susidies our paid out to any energy sector, Oil companies get billions or it. I agree that corn ethanol is not an alternative, its just a supplement.

[jackooo]

They are hungry in Africa because they will not wear condums. Humans should take responsibility for their own children. It is easy to give birth but hard to support many children.
As Judge Judy would say, "You have to find something else to do, hopefully getting a job is at the top of the list".

[Augustus]

done,
Please explain what subsidy you know of that is "paid out" to the energy sector. I know of several natural gas producers who did not get their checks for the last 15 years. Be specific because I want to actually get the money - not a load of BS.

[Chris M]

Are we really so misguided? Our bread basket is one of the few resources we have. How many millions of tons of grains did we export last year? Does anyone really believe that US govt mandates are driving deforestation in Brazil or India? Oil is at $110 a barrel and once it is consumed there will be no more, well at least not for a few hundred million years.

Any article that condemns biofuels without mentioning the current price of oil is pointless. If oil was abundant and cheap our only concern would be CO2 emmisions, maybe.

Finally, yes it is cheaper to slash and burn, than it is to buy oil on the open market. Blame rests squarely on our shoulders. We consume too much, plan too little and worst of all, choose poor leaders. What did we really expect?

[RealtorBOB]

It all came about when President Bush heard someone say that they got gas from corn.

[User 169490]

This isn't news. We all knew it. The politicians knew it at the time. The information was easily available and quite easily digestible and compelling. It was simply ignored for political gain and everybody and their mother were speaking out against it citing those in-your-face reasons. Made no difference, there were votes to be had. Even the farmers knew it was BS as well, but it was time to get the hand in the til while the gettin was good. The bigger shame was the legit policies were short-circuited and we have lost valuable time. This one is going to cost the rest of us.

[Steve - frugal and cheap]

Of everyone who has written and read these posts arguing about the best way to produce fuel, my question is, "How new is your car?" America has become a disposable society. China helps us with that. On the street where I live, I'm pretty sure I earn more than most of my neighbors (all of us lower to mid Middle Class). However, I drive the oldest cars ('95 Accord and '98 Windstar). Everyone else is driving virtually new cars.

We can argue about the cheapest and best ways to produce energy and protect our environment, but how do we spend our money? Is it more important to have the latest technology and drive a vehicle with a perfect paint job and new car smell? You can argue that newer vehicles consume less gas, but you'd be hard pressed to convince me that the cost of producing and destroying vehicles is cheaper than driving a dependable car longer.

The last car I got rid of ('89 Integra) had 206k miles and my niece is still driving it. My Windstar has close to 200k now and the Accord has around 180k. Incidentally, I do little more than change the oil and care for the tires. When the vehicles starts to cost me more money than they're worth, then I'll sell and go buy another used vehicle.

Bottom line, if we really care about how much energy we consume, how much we pay for products, how much we care about the environment, then our lifestyle should reflect that. I think my family is doing its part, but the society around us is far too materialist too really care.

How new is your car?

[FreddyfromNH]

This guy doesn't know the whole story. The corn, which the farmer was going to plant anyway just more of it, is sent to the ethanol plant. The sugar from the corn is turned into ethanol. The leftover distillers grain can have the corn oil squeezed out of it and turned into biodiesel. After that the grain can be fed to cattle which will promptly turn it into cow patties which can be scooped up and put into digester which will create methane gas that can power generators that farmers can make electricity with and sell the extra to utilities. The dried cow patties then can be spread onto the cornfields for fertilizer so that the farmer can plant another crop the next year. A closed loop system. And by the way that big bad "ethanol subsidy" goes to the oil companies to blend the ethanol into the gasoline. These hack writers need to take a few tours of some of these facilites.

[bouzerdad]

People are talking like Ethanol stocks are overvalued currently.
Most are a fraction of what they were valued at 5 years ago.
I suggest they are significantly undervalued whether fuel usage increases or not. Am I missing something?
Trying to determine if I should back up the truck or run away from the stock.

[Corn Screw]

ADM? US govt is run by who? I love to see the whacko's on these sites. Oil was the first conspiracy. Now crybabies are all over corn.
NOONE IS COMPLAINING about the banks. The banks are the driver for corn prices through their hedgefunds. Direct and indirect. The finance and use leverage to prop up firms like FCSTONE, LANSING TRADE GROUP, CARGILL, ADM and the NYMEX 19. THE BANKS OWN THIS CORN SCREW.

NOONE is complaining about the devaluation in the US DOLLAR the real driver for huge commodity price revaluation. Hedge funds using bank sponsored letters of credit. US Treasury lends out to the banks at 1-7 ratio. Hedge funds borrow at 1-4 ratio. This whole economy is nothing more than one big stinking ponzi scheme.

NOONE is complaining that US car companies have to navigate the policy du juor energy policy and have made them uncompetitive after tremendous R&D and marketing.

NOONE is complaining that MANSANTO AND POTASH are about to quadruple profits over the next 5 years for seed and feed.

Ethanol refining is a product of cheap corn policy from 1993-2000 under a Democratic run USDA. The US govt has tried to wean farmers from tillage and crop subsidies and have created the ethanol situation. Too bad the hedgefunds found a way to attack reasonable profits by bidding up corn to the last profitable gallon.

NOONE IS complaining that we are all working for the banks. Mortgages and assets are devalued by 25-35%, and small industrial processors like ethanol are unable to manage a profit...because the banks ARE the HEDGEFUNDS. They have managed to corn screw all profits, project finance, and do it with leverage from our US TREASURY.

Wake up people. The banks have all of the power, and are being bailed, while they are bailing corn at all time profits for their stable of hedge funds that they directly and indirectly control.

Carlye Group failed on Mortgage leverage calls by their banks. Wait until this corn screw unwinds.....do not hold commodity paper and hold your shorts.

[Tonky]

Yes what a GARBAGE article!

It's no news that ethanol production is currently inefficient.
NEW TECHNOLOGY is coming soon that can turn any organic material into ethanol.

Wood chips, newspaper, industrial waste, banana peels, etc...

Serious "Back to the Future" technology cometh

[HKL]

Anything that burns is energy. Ethanol, methane is renewable. Period. What is renewable and clean is the best option for next generation, especially who lives at coastline areas. Deforestation to open more lands for sugar and corn fields are one of the scarifices and it's worth it. Basic arithmatic will show you why it's worth it. Deforestation can be replanted in other areas where the land is not suitable for these crops. Hence carbon absorption remains approximately the same. The ethanol produced will reduce fossil fuel consumption pro rata and our air becomes cleaner. Those who talks about ethanol scam is definitely tightly connected with oil industries. More ethanol being accepted means less fossil fuel demand, hence less profit for oil industries. It's worrisome, how in our current society, a short term interest overcome the long term interest of mankind.