Undrinkable and Unsustainable

Mr. Bailey did a little visiting recently in South Dakota:

“I’ve always wanted to know, can you drink what you guys make?,” I asked, sitting in Jim Lane’s office at the Advanced Bioenergy ethanol plant in Aberdeen, South Dakota. After all, ethanol plants ferment corn just like bourbon distilleries do. Lane smiled, pointed to a small jar of water-clear fluid on the table at which we were sitting, and said, “Open it up. Give it a smell.” I did. It felt like several layers of the cells lining my nostrils were being burned off. Lane smiled some more. The obvious answer was no.

I wonder if the bourbon distilleries get government subsidies? If they don’t, they probably have a good basis for asking, eh? After an interesting tour of the process, we get the following:

Lane is an earnest believer in the benefits of ethanol and was eager to persuade me that ethanol was good for the country and the economy. Like many others whom I’ve met in the renewable fuels sector, he forcefully argued that ethanol helped free us from foreign oil, provided good jobs, boosted the economies of rural communities, and helped reduce our greenhouse gas emissions. When I asked Lane about the $6 billion in tax credits given to the ethanol industry by the federal government last year, he retorted that oil companies get subsidies too. In fact, The New York Times reported in July that the oil industry got $4 billion in tax breaks last year. Many of the tax breaks, however, are standard ones like deducting interest expenses that nearly every industry enjoys.

I’ve noticed that many people who are personally benefited from the ethanol industry are strong proponents of it. There is nothing wrong with supporting your industry, as such. However, to do so in opposition to the realities of the matter is short-sighted.

However, it’s the conclusion of this article which particularly resonates with me:

It’s past time for the ethanol industry (and all other energy supply industries) to stand on their own. Although this is probably a pipe dream, all energy subsidies should be ended and the market allowed to determine which fuels win. The ethanol tax credit expires at the end of this year. Congress should let it die.

Indeed. Sink or swim, the market should get a chance to decide who wins and loses–not the government. Of course, shifting from a subsidized ag industry to a non-subsidized one will be painful whenever we do it. The longer we put it off, though, the more pain it will cause.

2 thoughts on “Undrinkable and Unsustainable

  1. Ethanol subsidies go to the GAS AND OIL companies to mix the ethanol in their products. If the ethanol industry could sell directly to the retailer –by using blender pumps–then the subsidies would be unnecessary anyway. The more blender pumper we put in place–the higher the quality of the gasoline that we would mix with the ethanol–and the less foreign oil that we would need to import.

    1. Mera,

      Thank you for your comment. Ethanol subsidies, however, do go to the ethanol producers (in the form of massive tax credits) as well as the petroleum companies.

      I doubt that selling directly to the retailer would do away with the need to subsidize the current production of ethanol–and that will remain true until it costs less to produce a gallon of ethanol, sans subsidies, than it does to produce a gallon of gasoline.

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