The Government's Helping Hand

In March I blogged about energy policy and whined that “I don’t believe Washington can solve” our energy problems, but I didn’t realize they were actively exacerbating the situation.  Instead of doing anything productive about increasing energy supplies or means of production, they decided to support the politically correct “green” recyclable energy resource, ethanol.

As with many of the government efforts, good intentions seem to be far more important than reasoned facts and tough decisions.  The concept that we can grow corn every year and never run out of fuel sounds like an ideal solution.  Certainly it was supported by the Corn Belt Senators and Congressmen, democrat and republican alike, and opposed by the evil “big oil” companies.  The opposition of big oil was practically enough to ensure democrat support regardless of the merits of any idea.  I am a firm believer that we need to do something now to ease our dependence on the despots that control a large percentage of the world’s oil, but we should do something productive rather than do something that feels good.  Ethanol is not the answer; some biofuels (sugar beets?) may work, but the science of ethanol from corn has proven to be impractical.

Assuming the math of people that study these types of things is correct, it takes about a gallon’s worth of fuel to produce a gallon’s worth of ethanol if production, fertilizer and distribution is taken into account.  Thus, no matter how many bushels of corn are used to make ethanol, we still have no additional energy to use.  But this is not a totally zero sum game, which would be bad enough.  The effort and the land used for the growth of the raw materials, corn, come from the same land that could be used for food cultivation.  There are a lot, but still a finite amount, of acres that may be used to grow corn.  If a farmer makes $5 a bushel growing corn for ethanol rather than growing edible soybean for pennies, the choice is obvious; land will be diverted for fuel production rather than food.  Along with the diversion though, the cost of soybeans will go up as well.  This ignores the fact that soybeans are already going up because they are used in biodiesel fuels and are having the same problem as corn based ethanol.

Now, to the surprise of no one, the cost of food is going up.  The basic economic law of supply and demand is alive and well.  With the cost of grain going up due to corn being diverted to ethanol rather than food (along of course with the cost of regular gasoline going up), obviously the cost of meat, as corn is used for feeding livestock, will go up.  Further, as soybeans are ubiquitous in food production and land is being diverted from soybeans to corn and biodiesel, the cost of virtually all other basic foods are going up as well.  As food is fairly important for life, this has had a drastic impact on the poor of the country, and the world as well to the globalists among you.

Our Congress subsidizes this madness to the tune of $8B annually; these are your tax dollars at work.  Remember this cost provides zero net increase in usable fuel, but takes food away from the supply system.  At least Congress is "only" spending $1B on biodiesel.  Congress wails about the profits of big oil, but gives $8B away to increase food costs and starvation world wide.  Insanity is still the order of the day in Washington.

We must come up with a coherent energy policy immediately.  Drill in ANWR.  Drill in the Gulf and off-shore.  Open new refineries.  Build nuclear power plants.  Research synthetic fuels.  Obviously conservation is helpful, but we cannot conserve our way out of this mess.  This is not rocket science.  Going to Mars is difficult; solving our energy needs is easy.  Easy for all but our political class who insist on making the wacko tree huggers on the left happy.

Comments

[Jerry Scarborough]

Timo,

Not only do we subsidize Ethanol, but we're still paying farmers to leave their fields fallow. My grandfather farmed for most of his life. He used to complain bitterly about the soil bank. He didn't like to see people get his tax dollars for doing nothing. The soil bank died back in the 60's as I recall. But, it's clone the "Crop Reserve Program" or something like that, is still paying farmers not to grow things, even though we are now seeing shortages. Your tax dollars at work.

And, the political class, as you like to call it, still hasn't figured out how to do the greatest good for the greatest number. Our most recent energy policy was pretty much written by the oil companies. So, it is centered on oil. That's not the fault of the oil companies. Oil is what they do. And, in the short term oil is what we need. But when we make a short term advance (like drilling in ANWR - which yes we ought to do), we stop thinking long term. And, there goes any real attempt at policy. No political class interest.

Long term thinking requires research into synthetic and alternative fuels. Again, the oil companies aren't going to get into that in a big way. They're into oil. Since they want to stay viable over the long term, I have no doubt there is some alternative research going on. But, they're spending most of their research dollars on new methods of oil recovery. That is what they do.

In the mean time the tree huggers, who don't want us to use available fuels, also don't want us to use nuclear, or coal, or anything else available today. I don't think wind power is going to make my car work too well. I think the sails would take down all the power lines. And cornering would be really tough.

The other fuel alternatives are too far off to be practical today. We can't go back to the 19th century. We need a plan to go forward.

[John J]

Russia and Kazakstan have placed an embargo on wheat exports to insure that there is a domestic supply at a price that the people of those countries can afford. We cannot control oil prices because we have to buy more than half of the oil we need from foreign sources at the prices that the world market charges. However, most oil exporting countries reserve enough of their oil for domestic consumption at affordable prices. In effect they have two markets: a domestic market which gives the producers a decent profit and after the domestic demand is met, the rest of the oil can be sold at whatever price can be obtained in the world market. The US produces more than enough food to feed our people, but the greedy bastards who control the market want every bit of food to be sold at world market prices. We need a two tier market: first, one for domestic consumption at a reasonable profit to the farmers, and when the domestic market is satisfied, what is left can be sold to the rest of the world at whatever prices the market will bear. Our people should be fed first, only then the starving masses of the world.

[MSUGeek]

From an April 17, 2008 AP release:

"After more than a year of hearings, a Michigan House panel on Wednesday overwhelmingly approved a rewrite of the state's 2000 electricity law despite opposition from groups that have saved money under that law.

The bipartisan legislation would begin limiting the amount of competition that the state's major electric utilities face from alternative power suppliers for business and school customers.

The bill also would change how rates are raised and help utilities recover some financing expenses from customers during the construction of new multibillion-dollar power plants.

And it would ensure all customers pay the actual cost of the electricity they receive. Rates historically have been "skewed" by regulators so residential customers pay less than actual costs while business customers pay more. About $350 million would be shifted from the bills of companies, universities and others to residential customers over five years under the measure."

This law rewrite is what is behind those television commercials trying to sell the public on the future of energy in Michigan.

Notice that two parts of the law will cost the average Joe Consumer an arm and a leg. First, your rates will raise now to pay for construction of power plants that will not see a watt of output until well into the next decade. Second, the law will level out the rates between business and residential customers. Businesses will be paying lower rates and can still write off their utilities as an expenses. Residential customers will be paying more without being able to write off the expense.

I know that I am in favor of new nuclear plants and renewable energy in Michigan's future, but I am not sure where I stand on how to pay for it. I just know that I do not like to be soaked.

[parrot]

In 1991 I had a car (a metro) that got 50 mpg...1995 a car (accent) that got 42mpg, today the top mileage cars get around 35...and yet the auto industry says it can't meet cafe standards that are proposed. Do americans actually need the extra horsepower the industry hypes? There are lots of us who don't care if they can get from zero to one hundred in six seconds, and no matter how you look at it, doubling the mileage of our cars would halve the gas used. That is still the most efficient way to solve the problem.