Subsidy Eye

http://www.globalsubsidies.org/

77 Comments

    • ON: Tue Oct 14th 08:51 AM
      Commented on:
      Study Shows Ethanol Energy Efficiency Is Growing
      Sorry, obviously I meant to say, "then why shouldn't the long-term trend (all else equal) for corn prices have been downwards, or at least rising at less than the rate of general inflation?"
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    • ON: Tue Oct 14th 08:49 AM
      Commented on:
      Study Shows Ethanol Energy Efficiency Is Growing
      "The university of Illionis shows corn prices growing at half the rate of inflation dating back 30 years." Well, we're always hearing from the industry that they continue to improve yields and drive down costs. Given that farmers are price takers, then, why should the long-term trend (all else equal) for corn prices have been downwards?

      Of course, subsidies played a role in depressing prices also. But, I maintain, 2005 was not a typical year. Marketing loan payments for crops during that year were TWICE what they were in 2004. And ad hoc and emergency payments were 10 times what they were in 2004.

      All in all, federal government payments to farmers in 2005 were almost twice ($24.3 billion) what they were in 2004 ($13.0 billion). In 2008 they are expected to be $13.4 billion -- i.e., no lower than what they were in 2004, and a bit higher than what they were in 2002 ($12.4 billion).

      fpc.state.gov/document...
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    • ON: Thu Oct 9th 15:56 PM
      Commented on:
      Study Shows Ethanol Energy Efficiency Is Growing
      Wheels 14: that was in 2005, an a-typical year (thanks to Hurricane Katrina, which shut down the Mississippi ports for several months, thus limiting exports and depressing the domestic price).

      The point about ethanol subsidies (unlike the crop payments), is that the USA has committed to reducing crop subsidies as part of the WTO's Agreement on Agriculture, whereas in the case of ethanol subsidies, the sky's the limit. And the annual expenditure is growing fast.
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    • ON: Thu Oct 9th 13:39 PM
      Commented on:
      Study Shows Ethanol Energy Efficiency Is Growing
      Wheels 14, as for deducting the costs of crop subsidies, that is an interesting question. Crop subsidies depressed crop prices, some would say (in the nine years following the 1996 reforms) by 23% below average farm production costs for corn, and 15% for soybeans.

      www.ase.tufts.edu/gdae...

      Rather than speaking of "savings" in crop subsidies, however (which I do not think should be treated as entitlement), when we count the contribution of corn-ethanol subsidies to increases in the cost of corn, we should count only the increase above the price that would have obtained in the absence of crop subsidies -- i.e., which would at least have covered production costs. Sorry, but I can't provide that figure at the moment.
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    • ON: Thu Oct 9th 09:54 AM
      Commented on:
      Study Shows Ethanol Energy Efficiency Is Growing
      Frflyer, I'm glad to learn that you are "not a big advocate of ethanol unless it proves to be economical and environmentally makes sense." I can agree with that.

      As for the $84 billion a year estimate from the "Set America Free Foundation", I can't find in the document. The figure I find is $43 billion in lost local, state and federal tax revenues. That figure is $10 billion higher than the $33 billion reported by Freinds of the Earth, and is presumably explained by the inclusion of state and local tax breaks and subsidies.

      The report also enumerates numerous other costs of oil, some of which would be hard to confirm or refute without looking at the original studies from which teh data are derived.

      But back to the comparison with ethanol subsidies, the figures I referred to above were just federal subsidies for ethanol. Throw in state and local tax breaks and subsidies, and the total value comes to over $1 per gallon currently.

      www.earthtrack.net/ear...

      Of course, if one were to expand ethanol use on the basis of (U.S. produced) cellulosic ethanol, then you're looking at $1.01 per gallon ($1.50 per gallon of gasoline equivalent) just in federal tax credits, not to mention subsidies for related infrastructure and (at least in the near term) for plant construction. Add to that various state sales-tax and fuel-tax exemptions for ethanol (or E85) and the total cost could exceed $2.00 per gallon of gasoline equivalent in a number of states.

      Of course, as the Set America Free Foundation document points out, there are indirect costs associated with oil dependency. So to are there from biofuel use, especially biofuels made from cropland. Higher prices for food and other agricultural materials is just one. Economic losses due to supply disruptions could also be high: witness the panick that preceded this year's corn crop before the floods finly subsided.

      Again: the country needs to wean itself off of oil, and stop subsidizing it, but it is hardly a winning strategy to try to buy itself freedom from that dependency by creating a new industry that itself is massively dependent on subsidies.
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    • ON: Wed Oct 8th 13:12 PM
      Commented on:
      Study Shows Ethanol Energy Efficiency Is Growing
      Mr. frflyer, could you please provide a source for your "$84 billion annually in tax credits and subsidies to big oil"? I provided a source for my number -- Friends of the Earth (hardly an organization that could be accused of being biased towards the oil companies).

      You equate subsidies for corn ethanol with subsidies for renewable energy generally. When so much non-renewable resources (eroded soil, fossil water in the western Great Plains, phosphate, energy to produce the N fertilizer, fossil energy used in farming and processing the ethanol) are used in its production, calling it "renewable" is stretching the definition.
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    • ON: Wed Oct 8th 12:16 PM
      Commented on:
      Study Shows Ethanol Energy Efficiency Is Growing
      Um, from where does the "2 to 3 times more efficient than previously thought" come from? The article says "Compared to just five years ago, ... ethanol plants produce 15 percent more ethanol from a bushel of corn and use about 20 percent less energy in the process". It is unclear whether they mean that the plants have reduced their energy use per gallon or per bushel by 20 percent (the latter would then mean a gain of 44% more gallons for the same amount of energy inputs), but I'm not sure how that translates into "2 to 3 times more efficient".

      I agree with Duude, of course, when he writes, "So then, let's get rid of the subsidy and see how it works." Wheels 14 writes, "Are you willing to get rid of all subsidies? We could start by getting rid of the subsidies oil and natural gas receive."

      Of course we should. But let's compare apples with apples. According to a recent study by Friends of the Earth, "Big Oil, Bigger Giveaways",

      www.foe.org/pdf/FoE_Oi...

      oil companies will receive around $33 billion from the federal government over the next five years. That comes to $6.6 billion per year, divided over 75 billion gallons (1.8 billion barrels) of production, or $0.088 per gallon.

      tonto.eia.doe.gov/dnav...

      By contrast, the federal volumetric ethanol excise tax, starting next year, will be $0.45 per gallon (or $0.67 per gallon of gasoline equivalent). Assuming average production of 11 billion gallons a year over the next five years, that will come to a total of just under $5 billion per year, just for that one subsidy. Add in other federal subsidies (e.g., the small ethanol producer tax credit and subsidies for R&D and demonstration plants), and total federal outlays in support of ethanol will easily come up to parity with oil ... but for 1/10th the amount of energy.

      Oil companies do not need federal subsidies. Some ethanol producers might "need" subsidies to survive. But why should we keep them dependent on the public teat? And why should ethanol producers have priority over other sectors for government hand-outs during these austere times?
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    • ON: Fri Sep 19th 18:04 PM
      Commented on:
      Ethanol Stocks: The Good News and the Bad
      "It seems that biodiesel has a much better future than ethanol. There is too much government involved in ethanol." -- bobjou

      You need to read up on biofuel policy, bobjou. Federal support for biodiesel is as heavy as for ethanol, granting it $1.00 per gallon in tax credits, compared with $0.51 per gallon for corn ethanol. In addition, most producers benefit from a $0.10 per gallon Small Producers Credit on the first 15 million gallons they produce in any given year. Producers in Kentucky get an additional $1.00 per gallon, and producers in Pennsylvania $0.75 per gallon.

      First-generation biodiesel would have no future (except as a botique fuel made from waste cooking oil) were it not for these subsidies. The price of feedstock accounts for 80% or more of the cost of producing biodiesel, and that cost is today almost 3x what it was three years ago.

      Biodiesel from algae may have a bright future ... eventually. But it is still in the pilot and demonstration stage.
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    • ON: Thu Sep 11th 10:36 AM
      Commented on:
      Political Energy Policy Just for Laughs
      User,

      Ethanol (and other biofuels) don't drive up the price of food? Driving up the price of corn was the whole POINT of support of corn ethanol. That is why the National Corn Growers Association loves it so much, and fights so hard for continuation of the government subsidies and mandates.

      If one measures effects of the diversion of corn to ethanol on final consumer spending (as measured by the USDA, 45% of which is weighted by the cost of meals eaten in restaurants), ethanol's impact on year-on-year price rises is modest in percentage terms (though still more than $10 billion in absolute terms). If one measures the effect of ethanol on GRAIN and OILSEED prices, however, the percentage is much, much larger. That is the measure that counts, by the way, for the poorest people in the world, who are spending more than 50% of their household income ($2 per day or less) on basic foodstuffs, not the highly processed, highly packaged stuff that we all buy in supermarkets.

      See: papers.ssrn.com/sol3/p...
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    • ON: Thu Sep 11th 09:02 AM
      Commented on:
      EU Set to Cut Biofuel Target to Just 6%
      Even the 6% biofuel target is too high. What the EU needs is diesel substitutes, and at the moment and for at least the next 10 years that means biodiesel from fats and oils. The supply of used cooking oil is way too small to meet that demand. Hence we are looking at more land being planted to oilseed rape (canola) in Europe, less into wheat and barley, and more production of palm oil in south-east Asia, and palm oil and soybean oil in Latin America, to satisfy this insatiable, and highly subsidized "demand".
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    • ON: Thu Sep 11th 08:54 AM
      Commented on:
      Political Energy Policy Just for Laughs
      I tend to agree with Steven Hansen. He hits the nail on the head when he writes, "Another detail conveniently left out by the Presidential Candidates is that they do not have the authority to get any of these energy solutions implemented. Of course Congress does, if you can stomach a solution coated with pork." The problem is not that Congress refuses to get its act together, but that when it does it is swayed by special interests to pick what those interests tell them are winners, rather than to create technologically neutral, enabling legislation that will allow the market to work out solutions to broadly set priorities. Congress should stop subsidizing production and support research, tying development and demonstration to results.
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    • ON: Fri Sep 5th 22:54 PM
      Commented on:
      Ethanol: Our Answer to Reducing U.S. Dependence on Foreign Oil
      Good for you, Rickl, if you can get the same gas mileage on E30 as with pure gasoline. Most people's vehicles wouldn't.
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    • ON: Thu Sep 4th 17:12 PM
      Commented on:
      Ethanol: Our Answer to Reducing U.S. Dependence on Foreign Oil
      Dear RickH: Yes, that's why I put in brackets "(or, ultimately, how far it can move a vehicle with a given volume)". I realize that engines vary in the fuel-economy hit they take with different ethanol blends. But there is also a lot talking up of the kind of fuel economy vehicles COULD achieve if their engines were optimized for ethanol. Meanwhile, in the real world, E85 reduces fuel economy in FFVs by 25% ... at least according to the EPA.
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    • ON: Tue Sep 2nd 11:19 AM
      Commented on:
      Ethanol: Our Answer to Reducing U.S. Dependence on Foreign Oil
      For what it's worth here's an alternative take on Tim Plaehn's article:

      www.thetruthaboutcars..../

      "E85 Boondoggle of the Day: Good To The Last Cob
      By Edward Niedermeyer
      August 27, 2008

      It's always fun to see analysts justify their way to a predetermined conclusion, especially when the facts do not come close supporting it. At the usually on-point SeekingAlpha blog, Tim Plaehn tries his hand at another round of corn juice justification, this time with a new twist: cobs, baby. Claiming that high food prices create incentives for "efficiency and innovation" rather than say, cutting the cord, Plaehn lays out the roadmap for the ethanol industry's next big thing.

      Since everyone and their senile grandparents know that cellulosic, not feedstock-based, ethanol is the future, Plaehn appropriates what little future the biomass-based fuel has into the ethanol farm subsidy racket. He points to a company (POET) that uses cellulosic ethanol extraction to squeeze some extra juice from corn cobs, rather than non-feedstock biomass crops, arguing that the expensive technology will extract 27 percent more ethanol per acre of corn.

      If we're talking about investing in cellulosic extraction, it makes far more sense to base it off of such low-impact, high-efficiency crops as switchgrass. Except that this far more logical approach would mean the end of government ethanol subsidies to corn producers. So what other miracles does Plaehn forecast to allow ethanol to reduce dependence on foreign oil? More expensive technology of course, only this time we're talking blending pumps which could dial in the exact amount of ethanol consumers want in their gas. Choosing between E20, E30, E40, etc sounds great, but at what cost an all-new infrastructure? That's precisely beside the point for the ethanol lobby, who know that infrastructure-buildin... is just another great way to get the government to subsidize their marginally-viable product.

      But this is exactly what you should expect from a heavily criticized, multi-billion-dollar pork project that claims to be chasing "efficiency and innovation" without ever truly exposing itself to market influences."

      (And, no, my name is not Edward Niedermeyer.)
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    • ON: Tue Sep 2nd 11:14 AM
      Commented on:
      Ethanol: Our Answer to Reducing U.S. Dependence on Foreign Oil
      Dear RickH,

      My comment on methanol was not a recommendation to use it. I was merely referring to it to illustrate my point that the energy content of a fuel (or, ultimately, how far it can move a vehicle with a given volume) matters much more than simple volume, so when people speak of the contribution than any alternate fuel is making to total transport fuel demand they should adjust for its lower energy content.
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