Oh, by the way, ethanol subsidies are dead.

Red State ^ | December 29, 2011 | Moe Lane

[Cincinatus' Wife]

Details here and here: the short version is that the Senate back in June kicked off opposition to continued ethanol subsidies via a bipartisan amendment: it didn’t pass, but Congress has just let both the ethanol subsidy and a restrictive foreign tariff (on Brazilian sugar-cane ethanol) lapse. Given that the Iowa caucuses will be finished by the time Congress reconvenes – and given that the House of Representatives is currently chock-heavy with people who spit at the very phrase ‘ethanol subsidy’ – getting back either is going to be a problem for the domestic ethanol industry. Mind you, there are still mandates for using ethanol in place, but note again the ending of the tariff; I’m not a businessman, but effectively lowering the price of Brazilian ethanol by 54 cents/gallon while simultaneously effectively raising the price of domestic ethanol by 45 cents/gallon sounds to me like it would at least raise some intriguing alternatives.

More to the point, ending the subsidies on domestic ethanol production is frankly more ethical anyway. Far too much domestic ethanol is made from perfectly-good foodstock that could be better served, well, feeding people. The cycle was rather nasty, thanks largely to that subsidy; and, in fact, it’s one of the reasons why food prices have been rising lately.

In closing: it may or may not make long-term sense to include ethanol into our energy usage. After all, if you can burn something then by definition it’s an energy source. But we cannot adequately and empirically judge the usefulness of ethanol when its market value has been distorted by government interference. Removing the subsidies and tariffs – which is another way of saying ‘picking winners and losers’ – is a good first step towards coming to that judgment.

[BfloGuy]

So what will be the impact on 10% ethanol gassoline at the pump?

It will be interesting to watch.

If Congress does nothing about the ethanol requirement, then I'd speculate that:

1. Brazilian imports of ethanol will increase.

2. A lot of American ethanol producers will go bankrupt.

3. The corn crop will return to food production causing skyrocketing prices to gradually fall back to earth.

All in all, a net plus for consumers.

[bert]

-——The corn crop will return to food production -——

actually, the farmers will make less money because theywill grow less corn

impact on food is minimal

[HereInTheHeartland]

Yep, Perry has been there and seen it.

He mentioned he was at John Deere dealer the day before.
New EPA reqs to reduce sulfur will add $20,000 to the cost of some farm equipment for an extremely small amount of pollution reduction.

This kind of regulation is part of what is strangling an economic recovery. Ask any of us who work in the financial industry; same thing. The regulations we have to work around; do nothing to help consumers or make safer financial products.
They just add costs and frustrations to consumers.

[tacticalogic]

Perry came down hard on getting rid of the ridiculous EPA regs and other things.

The problem is they just want to get rid of the regs. The EPA will still be there, ready to write more regs as soon as they think they can get away with it.

We need to quit poking at the symptoms and go stomp on the problem.

[Recon Dad]

Those farm leaders have said there is no such thing as a level playing field in the energy business and add the government long has supported the oil industry.”

• natural gas - 25 cents per megawatt hour of electricity produced
• Coal - 44 cents per megawatt hour
• Nuclear $1.59 per megawatt hour
• Wind Energy $23.37 per megawatt hour
• Solar Energy $24.34 per megawatt hour
• Biofuels $1.78 per gal

These numbers do not include the additional subsidies we taxpayers have been compelled to pay for wind, solar and biofuels through the stimulus plan

Oil was not reported in these numbers since oil is hardly a factor in electricity production. However, oil benefits from a variety of tax subsidies for dry well expenses and royalty holidays dating from the $10-a-barrel oil days of the late 1990s, which the administration promises to rescind.

[RDasher]

At the most it would result in a 4.5¢ per gallon increase. But since it also reduces import restrictions, the likely case would be less. Plus market forces would also keep it less than that. The raw cost of the fuel is only part of the cost, production costs (refining), transportation (pipeline & trucking), taxes, and wholesaler and retailer profit margins also factor in.

[count-your-change]

The Midwest distillers may have to start selling cheap whiskey instead of expensive fuel. How's a moon shiner to make a living these days???

[1010RD]

Is the gasoline mandate going away as well?

[octex]

actually, the farmers will make less money because theywill grow less corn

impact on food is minimal

---

So much corn production has been used in producing ethanol in recent years that the costs of beef and pork products has risen significantly because the cost of the animal feed has gone up. As a result, like me, many others no longer eat so much meat as we previously did.

[Cincinatus' Wife]

Perry says all subsidies should go — along with cutting onerous regulations.

Please listen to Rick Perry’s conference call in Link #1.

[bert]

You fail to consider time and the perceived lag in production. The prices did rise in response to demand but in response the farmers produced more. This year, there will probably be record production in spite of the floods last spring. The production increase will mitigate the price rise earlier.

The increased production is not sustainable if ethanol subsidies are ended. Thus, farmers lose and land will produce something else or go fallow

[Oceander]

Just one more reason why the nominee should be chosen by convention and the primaries and caucuses relegated to what they really are: circus sideshows that you attend for amusement only.

Case in point is the focus of Iowa farmers on keeping their own unfair, uneconomic, undeserved subsidies - most of the rest of the country suffers for these subsidies and allowing Iowa farmers to decide for the rest of us who the nominee is going to be essentially means that the favored nominee is going to be representative only of Iowa, not most of the rest of the country.

What a crying shame.