Ethanol Bailout?

Ethanol Bailout? Time To Shuck Corn

By INVESTOR'S BUSINESS DAILY | Posted Friday, December 26, 2008 4:20 PM PT

Recent legislation mandated increased ethanol use as well as a 51-cent-a-gallon tax credit and more corn subsidies. Over the last two decades the ethanol industry has been kept alive with more than $25 billion in federal handouts. Yet it still can't compete.

Five of Iowa's 32 ethanol plants are in bankruptcy. They are operated by Sioux Falls, S.D.-based ethanol giant VeraSun Energy, which itself filed for Chapter 11 on Oct. 31. Eleven plants in other states have also fallen into bankruptcy. Nationally the ethanol plant failure rate is at 8.8% and could reach 22% in short order.

The Renewable Fuels Association, the industry's lobbying arm, has talked with Team Obama about further handouts such as $1 billion in short-term credit to keep failing plants in operation and $50 billion in loan guarantees to build more. The association wants to increase the 10% ethanol limit in gasoline for conventional cars and trucks and require that any carmaker getting federal funds produce only vehicles that can run on any blend up to 85% ethanol. ...

According to a report from the Hoover Institute's Henry Miller and professor Colin Carter of the University of California, Davis, "ethanol yields about 30% less energy per gallon of gasoline, so miles per gallon in internal combustion engines drop significantly." So the per-mile cost is actually higher at the pump. Meanwhile, it raises the food prices at the supermarket you drive to.

Corn ethanol is less energy efficient and costs more. It generates less than two units of energy for every unit of energy used to produce it. It takes 1,700 gallons of water to produce one gallon of ethanol. Each acre of corn requires 130 pounds of nitrogen and 55 pounds of phosphorous.

Food for thought and food for your automobile!

More bad legislation by Congress, more trouble for Auto Industry, and more junk science.