More Industries Feeling The Brunt Of Ethanol Subsidies

from the but-it's-alternative dept

Unintended consequences stemming from the federal government's love of ethanol continue to pop up in all corners of the economy. As we've seen, subsidies for corn are contributing to widespread "agflation", leaving businesses to deal with the challenges of higher commodity costs. As The Wall Street Journal notes, soap makers are getting hit particularly hard, as prices are up for beef tallow, a kind of fat that is an important ingredient in soap. Also, there's a new subsidy for companies turning animal fat directly into fuel, which will further shorten supplies of this ingredient. The plight of the soap makers isn't unique, and in fact it would be impossible to adequately anticipate all of the myriad effects of our ethanol policy. But it's clear that simply throwing money at any energy source deemed to be "alternative" is not particularly smart from the standpoint of the economy.


Reader Comments (rss)

(Flattened / Threaded)

  •  
    identicon
    Mark, Jul 10th, 2007 @ 6:22pm

    Alternatives

    Wow, didn't see that coming. You would think there were other mainstream methods for producing soap, although I do remember from summer camp making soap from lye, ashes, lard and some flowers.

    Aren't there folks making soap from cotton seed or coconut oil? Perhaps it's time for a new soap recipe. If it's primary use is for cutting grease, just use one of the many emulsifiers that are around.

    Don't flame, I'm just thinking outloud, I don't have the answers.

     

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    identicon
    Anonymous Coward, Jul 10th, 2007 @ 6:41pm

    "simply throwing money ... is not particularly smart"

    The idea originated with congress! Just how much intelligence did you expect?

     

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    Anonymous Coward, Jul 10th, 2007 @ 6:44pm

    Ted Turner

    Stop paying people like Ted Turner not to farm corn and it should sort itself out.

     

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    Anonymous Coward, Jul 10th, 2007 @ 6:45pm

    Follow the lobbyist's money.

    An idea doesn't have to be good. It's promoter just has to pay off the politicians.

    Once and done. If they're in office - vote them out. Repeat forever.

     

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    JohnnyGTO, Jul 10th, 2007 @ 6:46pm

    The natural order

    Business runs on the natural order of things where outside influences upset the balances developed by need. Like a rock slide damming a river sudden changes cause great problems.

     

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    Scruffy Dan, Jul 10th, 2007 @ 7:24pm

    Oil gets subsidized too

    Of course since the oil industry gets subsidies the only way for ethanol to compete is to give it subsidies... or stop giving the oil companies any money, but thats not likely to happen

     

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    Slartibartfast, Jul 10th, 2007 @ 7:28pm

    Politicians will make kneejerk decisions based on whatever they think will gain them the maximum number of votes next time around. Consequences that may occur after the next election are a long way down on their list of priorities.

     

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    hozed, Jul 10th, 2007 @ 10:48pm

    phew

    we might smell bad but atleast we can get away from each other

     

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    Ferin, Jul 11th, 2007 @ 5:02am

    Heaven forfend we simply look at mass transit and conservation, or *gasp* electric vehicles and nuclear power.

    >.>

     

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    JustMe, Jul 11th, 2007 @ 6:39am

    Ethanol is NOT the answer

    Ethanol burns up more fossil fuel to produce than it creates and gives around 20% less power (mpg) than fossil fuels. All this hyip over ethanol is just a lot of hyip.

    I agree with electricity as a realistic alternative. Solar-powered cars is a reality today but then where will the money come from to build roads...

    What a mess. I think I will go for a walk.

     

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    Marc, Jul 11th, 2007 @ 7:01am

    Feeding food to machines instead of people is pretty spooky. How about getting the oil from places like ANWR, and off-shore drilling as well as developing more Nuclear power? I suppose according to many we shouldn't scare the caribou and actually EATING our food is probably evil and contributes to global warming in some way, shape, or form. I wonder how many ears of corn it would have taken to power "Live Earth" and the transportation of our globe-hopping mega-stars...probably enough to spark another "Live Aid" for the people who could have eaten it. We are becoming the laughing-stock of future generations.

     

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    Bob, Jul 11th, 2007 @ 7:38am

    Alternative sources of lard

    ala Fight Club, how about replacing beef tallow with human fat? Thanks to cheap gasoline, there is an almost infinite supply of that.

     

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    d d, Jul 11th, 2007 @ 7:48am

    "beef tallow, a kind of fat that is an important ingredient in soap. Also, there's a new subsidy for companies turning animal fat directly into fuel, which will further shorten supplies of this ingredient"
    Sounds like Vivoleum
    I guess their speech wasnt a parody but true.

     

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    Joe Smith, Jul 11th, 2007 @ 8:45am

    Unintended consequences

    The "law on unintended consequences" just means that the decision makers were ignorant or willfully blind. If you introduce a subsidy that increases one particular demand for a product you have to know that all of the existing uses for that product are going to be effected. The flow of inputs through the economy has been extensively modeled since at least the Second World War. http://en.wikipedia.org/wiki/Input-output_model

     

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    Danyel Lawson, Jul 11th, 2007 @ 8:46am

    Ethanol and Big Corn and Big Oil

    Connect the dots people. Our politicians haven't supported an alternative fuel much less mandated it's use ever. And big oil has more money than ever to throw around and squash any alternatives. So guess why they didn't stop ethanol? They are the same company and raising the price of corn while getting a subsidy to grow it is ok with big oil if you are a subsidiary of big oil.

    When corn based ethanol was about 96 cents a gallon on the commodities market and Brazilian sugar cane based ethanol was about 52 cents a gallon big oil/corn had congress pass about a 44 cents tax on Brazilian sugar cane based ethanol.

    52 + 44 = 96 Get it?

    It's not a conspiracy just economics. Big corn is so tightly bound to big oil and has been since the days of refer madness. Corn is a crappy crop. Corn leeches all the nutrients out of the soil. Corn needs tons of fertalizer made from ammonia a by product of the oil refinery process. Big oil likes corn. That is why corn is subsidized. Other crops like hemp which magically got grouped with the canibus ban are much better producers as a crop and leave the soil in better shape then when they were planted. i.e. No need for ammonia based fertilizers. Big corn had hemp crops burned to the ground after the hemp tax stamp act/scam was created. By our government not issuing hemp tax stamps even to this day all hemp crops with out the hemp tax stamp are illegal. There is no process in place to get a hemp tax stamp. Our tax dollars at work. Squashing the open market one cheap and environmently friendly product at a time while funding propaganda to make it all seem like common sense.

    Back to ethanol. Ethanol has always been an alternative fuel. Bo and luke Duke were always on the wrong side of the law for selling/producing it. Remember that episode with the super fuel? They ran their car on it. Imagine that a no toxic fuel that is better than gasoline but runs in cars without conversion. And its been available all this time. What a big surprise that it's only been legal on farms for farm nachinery use only all this time. Big oil have a hand in it? Kind of a rhetorical question. So that 10% ethanol mandate they sell with there propaganda and we eat it up. They used to let you have 0% ethanol in your tank and now they let you have 10% time to celebrate. Ha, not very funny.

    And what exactly did you think farm aid was about or did you get short term memory loss from all that corn syrup in everything you eat. First we bankrupt small farms because those people are outside of the system. That means they are self sufficient or didn't you know they stick blue dye in farm based ethanol in farms? If you were from a farm town you'd know because the cops would be pulling you over periodically to check your tank with a stick to see if your fuel was blue. Big oil can't go letting the free market keep your money out of their pockets. That would be unamerican. Then the banks/oil/big growers swoop in and pick up all that land cheap and grow corn on it in preparation for ethanol. Corn based ethnol being the only way for americans to pay for their gasoline several times over via subsides on corn.

    Watch Who Killed the Electric Car? if you want to get your head around the hydrogen economy propaganda. Wind power is already getting squashed by the new requirement that the FAA has to approve new wind towers. See hemp tax stamp above for a clue. i.e. put a windmill in your backyard and expect the same treatment as the Dukes of Hazzard get.

    I mean wht kind of idiot doesn't see all the free energy sources provided as side effects of the sun all around them everyday. It made me think why doesn't every city with a river accessible to them harness that power witha water wheelor 300? It is renewable and for all practical purposes unlimited and free. Are they that unobservant or are they hamstrung by big oil. Cause you can bet after our politicians give out water power rights the same as they did for oil to big oil you'll be paying for it twice at a minimum and be thanking them for doing it because of the propaganda.

     

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      Chronno S. Trigger, Jul 11th, 2007 @ 12:15pm

      Re: Ethanol and Big Corn and Big Oil

      First: The Dukes were always in trouble because they made and sold moonshine. They were alcohol runners. Like during prohibition and what indy racing came from.

      Second: I wouldn't be basing any of my arguments off of what I saw on a fictional TV show.

      I already know of people who use windmills, waterwheels, and solar panels to power their house. If they produce enough electricity to pump back into the normal electric grid, they get payed for it. (there's a law for that)

      Windmills, waterwheels, and solar panels aren't easy to implement ether. There is a lot of work that goes into just picking the proper place to put them. Most of the people that I know that have them already make six figure incomes.

      The electric car hasn't caught on because of several reasons. Not enough power to compare to a internal combustion engine. The battery doesn't last long enough. Look at how long it takes to charge a cell phone battery, at least an hour. Imagine how long it would take to charge a battery that runs your car. That's not a trip you could make to the local gas station on your lunch break.

      I'm not saying that the oil companies aren't out to get every last cent you have (and I have no idea what your talking about with the blue fuel) but check your facts.

      PS: ethanol will eat threw the gas lines of a normal car.

       

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      Octopulous, Oct 22nd, 2007 @ 1:09pm

      Re: Ethanol and Big Corn and Big Oil

      Dude, stop pretending to have attended the Bronx High School of Science and admit to your DeWitt Clinton academic background.

       

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    identicon
    yomamma, Jul 11th, 2007 @ 1:01pm

    Ethanol and Big Oil

    Danyel, you nailed it right on. Oil companies are slowly bleeding us dry. Up here in Montana farmers are getting paid not to grow corn. It's ridiculous. Chrono, you do make a good point that most people that have solar power or wind power are rich. This is mainly because it is so expensive to get started. As far as "aren't easy to implement" I would totaly disagree. Solar panels are the easiest, just mount them on your roof. Anyone with an IQ greater than their shoe size can put together a solar system. I firmly believe all fed and state buildings should be running off solar power. If it wasn't due to the startup costs I'd have it on my roof as well.

     

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  •  

    On lipodiesel

    For those who are curious about biodiesel made from liposuction fat ("lipodiesel"), see my article on Grist:

    http://gristmill.grist.org/story/2006/12/15/135249/27

     

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    Captain Obvious, Jul 12th, 2007 @ 10:59am

    Think About It

    One Big Difference between ethanol and oil that nobody seems to point out. Oil is imported, the $ leaves this country, and doesn't come back. Ethanol is grown and raised here. The subsidies go to U.S. companies. The money stays here. More $ for everyone in the U.S. is a good thing. Are costs of corn items going to go up? Yes! Actually, there is more money staying in the U.S. which does cause some inflation (when everyone has more money, money does lose value), so the cost of everything will go up somewhat. Is this bad? Maybe. Is ethanol perfect? No. Is it better than Oil. YES! And, as costs go up, other solutions will become more economical, like solar.

     

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    RE: Think About It

    Captain Obvious, you are obviously looking only at one side of the equation. First, regarding imports of oil. Yes, one might spend slightly less on oil imports (but don't forget the oil that is consumed in farm machinery to plant, till and harvest the corn), but at the same time the USA is spending more on (natural-gas derived) imports of fertilizer, and is exporting fewer tonnes of wheat and soybeans. Moreover, subsidizing biofuels is driving up the price of feed, which makes meat and dairy products more expensive. At the end of the day, the net cost to the country is higher, because resources are diverted from their most economically efficient uses.

    The import-substitution argument rarely holds up. If it did, the country could make itself richer by adopting a policy of autarky, making everything it needs and importing nothing. It is not happening because no politician wants to turn the USA into North Korea.

    In short, there is no free lunch. Indeed, lunch is becoming more expensive nowadays thanks to the government-mandated diversion of crops into fuel.

     

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