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BIG CORN AND ETHANOL HOAX

By Walter E. Williams
Wednesday, March 12, 2008

One of the many mandates of the Energy Policy Act of 2005 calls for oil companies to increase the amount of ethanol mixed with gasoline. President Bush said, during his 2006 State of the Union address, "America is addicted to oil, which is often imported from unstable parts of the world." Let's look at some of the "wonders" of ethanol as a replacement for gasoline.

Ethanol contains water that distillation cannot remove. As such, it can cause major damage to automobile engines not specifically designed to burn ethanol. The water content of ethanol also risks pipeline corrosion and thus must be shipped by truck, rail car or barge. These shipping methods are far more expensive than pipelines.

Ethanol is 20 to 30 percent less efficient than gasoline, making it more expensive per highway mile. It takes 450 pounds of corn to produce the ethanol to fill one SUV tank. That's enough corn to feed one person for a year. Plus, it takes more than one gallon of fossil fuel -- oil and natural gas -- to produce one gallon of ethanol. After all, corn must be grown, fertilized, harvested and trucked to ethanol producers -- all of which are fuel-using activities. And, it takes 1,700 gallons of water to produce one gallon of ethanol. On top of all this, if our total annual corn output were put to ethanol production, it would reduce gasoline consumption by 10 or 12 percent.

Ethanol is so costly that it wouldn't make it in a free market. That's why Congress has enacted major ethanol subsidies, about $1.05 to $1.38 a gallon, which is no less than a tax on consumers. In fact, there's a double tax -- one in the form of ethanol subsidies and another in the form of handouts to corn farmers to the tune of $9.5 billion in 2005 alone.

There's something else wrong with this picture. If Congress and President Bush say we need less reliance on oil and greater use of renewable fuels, then why would Congress impose a stiff tariff, 54 cents a gallon, on ethanol from Brazil? Brazilian ethanol, by the way, is produced from sugar cane and is far more energy efficient, cleaner and cheaper to produce.

Ethanol production has driven up the prices of corn-fed livestock, such as beef, chicken and dairy products, and products made from corn, such as cereals. As a result of higher demand for corn, other grain prices, such as soybean and wheat, have risen dramatically. The fact that the U.S. is the world's largest grain producer and exporter means that the ethanol-induced higher grain prices will have a worldwide impact on food prices.

It's easy to understand how the public, looking for cheaper gasoline, can be taken in by the call for increased ethanol usage. But politicians, corn farmers and ethanol producers know they are running a cruel hoax on the American consumer. They are in it for the money. The top leader in the ethanol hoax is Archer Daniels Midland (ADM), the country's largest producer of ethanol. Ethanol producers and the farm lobby have pressured farm state congressmen into believing that it would be political suicide if they didn't support subsidized ethanol production. That's the stick. Campaign contributions play the role of the carrot.

The ethanol hoax is a good example of a problem economists refer to as narrow, well-defined benefits versus widely dispersed costs. It pays the ethanol lobby to organize and collect money to grease the palms of politicians willing to do their bidding because there's a large benefit for them -- higher wages and profits. The millions of gasoline consumers, who fund the benefits through higher fuel and food prices, as well as taxes, are relatively uninformed and have little clout. After all, who do you think a politician will invite into his congressional or White House office to have a heart-to-heart -- you or an Archer Daniels Midlands executive?

Dr. Williams serves on the faculty of George Mason University as John M. Olin Distinguished Professor of Economics and is the author of More Liberty Means Less Government: Our Founders Knew This Well.

WHO'S REALLY TO BLAME FOR $110 A BARREL OIL
By Investor's Business Daily

Energy: A refinery burns in Texas while politicians fiddle in Washington.  As oil goes over $110 a barrel, we don't have to worry about Hugo Chavez restricting supply.  We have the Congress to do that.  Suppose you had a ton of money sitting in your bank account but you decided to max out your credit cards first.  That's the energy policy of the United States as fashioned by the Senate.

At these prices, we have a trillion dollars worth of oil sitting under a section of frozen tundra the size of Dulles Airport near Washington, D.C.  We could go get it.  Instead we prefer to shovel billions of our dollars to thugs like Chavez while the same politicians who lock up our domestic energy praise him when he offers "cheap" home heating oil to states in the Northeast.

Chavez has said he's changed his mind about cutting off supplies to the U.S., but it's because he'd have a hard time selling Venezuela's heavy crude -- which requires special refining -- anywhere else.  He's not doing us any favors.  Unfortunately, neither is the U.S. Senate.

Oil futures closed above $100 for the first time after the February 18 explosion at Alon USA's refinery in Big Spring, Texas.  It could be shuttered for two months.  Yet the NIMBYs (Not In My Back Yard) won't let new refineries be built, and the greenies won't let the domestic oil be refined.

The heads-in-the-tundra crowd is led by Hillary Clinton.  She has voted no fewer than nine times to block drilling in a tiny, frozen part of ANWR.  Her husband first blocked ANWR development in 1995.  After Hurricane Katrina disabled offshore oil platforms, revealing our energy vulnerability, Mrs. Clinton said: "It makes no sense to respond to a disaster in the Gulf by making a disaster in Alaska."

Never mind that the caribou and other critters have thrived despite drilling in Prudhoe Bay, which recently delivered its 15 billionth barrel of oil through the Alaska pipeline.  Oil from ANWR could meet all of New York's petroleum needs for 34 years, yet the state's junior senator opposes getting it.

"ANWR could supply every drop of petroleum for Florida for 29 years," said former Interior Secretary Gale Norton; "New York for 34 years; California for 16 years; or New Hampshire for 315 years."  It could also supply Washington, D.C., a place where there's no shortage of hot air, for 1,710 years.

In 2005, the Senate voted twice by narrow margins on amendments authorizing ANWR drilling to a budget resolution bill (March 16) and a budget reconciliation bill (Nov. 3).  Forty-one Democrats voted against both.  Twenty-three of them were around to have voted against ANWR in 1995.

Barack Obama, who has voted twice against drilling in ANWR, has noted that a "large portion of the $800 million we spend on foreign oil every day goes to some of the world's most volatile regimes."  Still, he says that "we cannot drill our way out of the problem."  Call this the audacity of helplessness.

In his book "The Audacity of Hope," Obama writes: "Instead of subsidizing the oil industry, we should end every single tax break the industry currently receives and demand that 1% of the revenues from oil companies with over $1 billion in quarterly profits go toward financing alternative energy research and infrastructure."  Yet he'd subsidize the ethanol industry, which contributes to rising food prices and hurts the environment through increased agricultural runoff.  He would feed the world, but he'd have us put ears of corn in our cars.

We are not against alternative energy.  America is going to need all the energy it can produce -- from all sources.  We just don't like leaving energy in the ground.  The Democrats promise HOPE and CHANGE.  Let's HOPE we develop our domestic energy sources, starting with ANWR.  Now that would be a real CHANGE.

WHERE TO BUY AMERICAN GASOLINE

Are you aware that the Saudis are boycotting American products?   Shouldn't we return the favor?  Can't we take control of our own destiny and let these giant oil importers know who REALLY generates their profits, their livings?  How about leaving American Dollars in America and reduce the import/export deficit?

An appealing remedy might be to boycott their GAS.  Every time you fill up your car you can avoid putting more money into the coffers of Saudi Arabia.  Just purchase gas from companies that don't import their oil from the Saudis. 

It might be of interest to know which oil companies import Middle Eastern oil and which do not?  These companies import Middle Eastern oil:

• Shell...................................           205,742,000 barrels

• Chevron/Texaco..................        144,332,000 barrels

• Exxon /Mobil.......................         130,082,000 barrels

• Marathon/Speedway............       117,740,000 barrels

• Amoco................................             62,231,000 barrels

• And CITGO oil is imported from Venezuela by Dictator Hugo Chavez who hates America and openly avows our economic destruction!  (We pay Chavez’s regime nearly $10 Billion per year in oil revenues!)

The U.S. currently imports 5,517,000 barrels of crude oil per day from OPEC.  If you do the math at $95 per barrel, that's over $524 million PER DAY ($191 BILLION per year!) handed over to OPEC, many of whose members are our confirmed enemies!!!!!

Here are some large companies that do not import Middle Eastern oil:

• Sunoco.......................       0 barrels 

• Conoco......................       0 barrels 

• Sinclair......................        0 barrels 

• BP / Phillips................      0 barrels

• Hess. ........................        0 barrels 

• ARC0.......................   0 barrels

• Maverick......................     0 barrels

• Flying J. ....................        0 barrels

• Valero..........................      0 barrels