John`s World on Ethanol

[BA Deere]

I don`t always agree with John Phipps, but he gives food for thought everytime I hear his commentary...and he once sent me a USFR coffee mug, he`s a genuine nice guy.    This week`s commentary was on ethanol and small refinery waivers, it`s interesting and he said something we never heard or realized "Ethanol is a market created by politics" and Economics 101 is little value in ethanol".

I`m pro ethanol and I agree with John Phipps at the same time, I am not against the government putting their thumb on the market, if it`s good for the country. However, that sword cuts both ways too, that doesn`t mean going crazy and mandating E-85 just so I get an extra nickel for my corn.  I think common sense of using ethanol as a oxygenate plus a little more is all the cookies that we should be satisfied with and be realistic about demand for all this corn that we are capable of growing.

Here`s John`s World commentary at 16 minutes if you want to skip right to it:

https://www.agweb.com/usfr

[rickgthf]

I'm sorry but if you agree with John based on his self-admitted  lack of any effort to understand the issues, both you and John are so wrong it's hardly worth the effort to discuss it with you, much less try to convince you otherwise.

  John, himself, stands there and says he won't spend the time or effort to understand the "small refinery" issue when it's really quite simple.  It is a strategy to undermine the RFS by disconnecting the market mechanism to connect the price of ethanol (& other renewables) to the energy market.

  The simple fact is, the one with the thumb on the scale is the petroleum industry.  And that thumb has been leaning hard on the scales since the 1920's.  For example, even today in it's reduced form, depletion allowance is worth $50 billion per year to the petroleum industry.  And I don't even think they have good numbers for the petroleum "Research" tax deductions but there's no doubt  that it dwarfs the depletion allowance.  You want to talk economics, take away the depletion allowance and the Research tax credits and then let's discuss the economics of petroleum.

  Yes, the renewable fuel industry does face some difficulties but to argue from the point of view of self-admitted ignorance and simply laziness isn't convincing.  And the fact that he's a "genuine nice guy" doesn't mean squat.

[BA Deere]

We spent $1 Trillion going to war for "the free flow of oil at market prices", big oil has all kinds of subsidies. But on the other hand our super power status is maintained with cheap oil and cheap food...that`s the United States` secret sauce.  

Quick little story our county had a poor corn basis 20 years ago, so we got all gung ho on "economic development" which is fine. So we got a chicken factory in to eat all this cheap corn, they didn`t have to pay property tax for 10 years and other goodies "tax increment financing".  Well all those heavy trucks hauling in feed and trucks hauling out liquid eggs busted up the blacktop.  So, no taxes from the chicken factory to fix the road they busted up.

That`s the way with ethanol too, it`s a great product, no question, it`s just that it`s not great enough to stand on it`s own.  You can say that about the oil industry ...but the oil industry would hire mercs like Blackwater and Haliburton to fight their wars ...and you`d also pay $20 for a gallon of gas too.

[scassellfarms3]

That`s the way with ethanol too, it`s a great product, no question, it`s just that it`s not great enough to stand on it`s own.  You can say that about the oil industry ...but the oil industry would hire mercs like Blackwater and Haliburton to fight their wars ...and you`d also pay $20 for a gallon of gas too.

Maybe but at $20 a gallon I think ethanol might be able to stand on it's own.

[BA Deere]

That is true, scassellfarms3.  90% of ethanol`s problem is that gas got too cheap.  The other 10% was over capacity blue sky, building the church thinking that every Sunday would have Easter Sunday attendance. 

[freedom1493]

@BA Deere 

Sad truth is if gasoline OR ethanol OR gasoline/ethanol blend ever became $20 a gallon ... it would mean that the US was in a war or a severe hyperinflation event, so nobody would be selling corn anyway because the government would be absconding with it for free in world-war time (courtesy of Obama's executive order - an interesting read) and it wouldn't even be available to the public or the Dollar would be absolutely worthless with hyperinflation and nobody could buy it anyway. 

Conversely, if the value of corn for ethanol was $20 high and the marketplace could tolerate it,  everybody and their brother would be stealing it out of the fields like they are doing with avocados and now apples.  The price of a bushel of Honeycrisp apples is $45.00 -- selling straight to the public -- this season.

Lots of folks do know why ethanol is/was put into gasoline on such a large basis -- it's one of the reasons people are always so pissed off at corn farmers -- they figure that that particular emergency situation is no longer in play and that ethanol has now been long politicized.  And farmers don't help themselves when they state, "Well, if so-so isn't gonna give me the market/money I want for corn, I am not going to give/sell them my vote."

I am beginning to see posts in the public domain by people who now accusing farmers of being in cahoots with government -- never a good sign of public sentiment.

[Hobbyfarmer]

Corn squeezins was put in gasoline as a cheap non-life threatening alternative to MTBE a proven carcinogen with a terrible track record of pollution. 

[freedom1493]

The powers-that-be began re-promoting ethanol as a renewable fuel during the late 1970s as a result of the oil/gasoline shortages, with the Energy Tax Act of 1978.

Then came:

 - the 1988 Alternative Motor Fuels Act.

- the 1990 Clean Air Act.

- the 1992 Energy Policy Act.

Changing out MTBE only began to occur around the year 2000.

Anyway, it is interesting that ethanol as a fuel apparently fell out of favor during Prohibition because of the moonshiners...who knew???

Resources:

https://www.ag.ndsu.edu/energy/biofuels/energy-briefs/history-of-ethanol-production-and-policy

http://ethanolhistory.com/

https://www.eia.gov/outlooks/steo/special/pdf/mtbe.pdf

[BA Deere]

Henry Ford`s Model T was the first flex fuel vehicle, you could turn a knob on the dashboard that would adjust the carburetor.  I think the story goes the Rockefellers with their Standard oil ended it.  I don`t think it was necessarily sinister, just Uncle Jed`s crude bubbling out of the ground was cheaper to refine than crushing ethanol...just economics.

https://www.youtube.com/watch?v=5qDYoEupI28 

[sw363535]

With some of the logic here ....... depreciation or "depletion" of an asset becomes redefined as a synister advantage for an industry..... insane liberal logic.