Gov. Rick Perry of Texas is fighting against the ethanol mandates. You can argue about his motives, and about the policy itself. But I'd like to focus on this line from a NY Times article:
LHT Inc., an infrastructure company, said it never would have spent tens of millions of dollars developing delivery pipes for ethanol without the mandated increases. “How do we get our money back?” an executive asked.
I personally hate the ethanol subsidies and usage mandates, but do feel for this exec. He made a business decision based on the mandates, and invested huge dollars. Should Congress reduce the mandate, LHT gets screwed.
I know, I know, "live by the (gov't) sword, die by the (gov't) sword". Still, gov't needs to remember that their actions don't exist in a vacuum. People and businesses make decisions based on new laws and regs. And once these mandates and subsidies and programs and tax credits get started, people will wail if they are taken away. I think better not to start these things at all.
You've picked an odd poster person for the maxim that 'government should keep its promises'. I'd point more obviously to those of limited means who counted on their investment in Social Security delivering what was promised. Instead they are barraged daily by lies about the 'insolvency' of the program.
Sure, some investors are out some money. But don't worry, they will make it up I'm sure in the next election cycle. And honestly, anyone who thought the ethanol business was going to pay off in a big way just wasn't paying attention. Regardless of the subsidy, shouldn't the 'market' be punishing this sort of poor business decision making?
You've picked an odd poster person for the maxim that 'government should keep its promises'.
Not really a poster person - just a quote that caught my eye in the article. (I also didn't think you could run ethanol thru a pipeline, so I am intrigued.)
I just see his position as a sympathetic one, and it was created because of the original mandate. Are all these new windmill farms selling power at market rates? If not, (and I don't think they are) what happens to those investors if the mandates for buying alternative power go away? I can see some normally quite conservative elected officials being swayed by such arguments.
You didn't think you could run ethanol through a pipeline? How did you think it was transported around the ethanol plant and from the plant to the delivery trucks for example, email, postcards, little ethanol gnomes carrying little ethanol buckets at the little ethanol factory?
This is from a 2006 article, so things may have changed since then, but I didn't think I was just making stuff up.
http://www.autobloggreen.com/2006/10/10/us-senators-propose-ethanol-pipeline/
Every time I contract with the government I keep three things in mind.
1) This is the same government who made all those treaties with Native Americans---no sure things.
2) The government spares no expense to save a dollar so keep everything neat, clean and documented.
3) The government works in two, four or six year increments (election cycles) and not beyond.
LHT, Inc. probably ignored all of these things to be the first to have an alternate delivery system. It was a business risk but there should still be some value in the pipeline for moving other materials.
good points to keep in mind, LV
Actually wind is pretty close. But they don't enjoy the huge government subsidies that coal, ethanol, oil and natural gas do.
Ethanol mainly goes by truck and rail.
There are several reasons:
Ethanol doesn't go well in a pipeline. It picks up water and other contaminants easily and it is highly corrosive in its pure form.
The corn itself is much easier to transport to a local ethanol plant.
We were never going to produce enough ethanol to make pipeline investments economically viable.
We were never going to produce enough ethanol to make pipeline investments economically viable.
Well, I'm not sure of the first part. The only way we'd continue to use ethanol is if cellulosic ethanol production becomes economically viable.
However, were this to happen, it would completely remove the need for a pipeline (which, of course, maintains your overall point) - ethanol plants could make use of the destination model, where they could locate near gasoline blenders and use locally grown switchgrass/stover/whatever.
Let's be realistic and understand it has been discussed on this blog before, there are lots of options for making ethanol. And yes, corn is one of the least economic sources even if the farmers have the equipment, knowledge, industry and political support to grow it as an ethanol source. Algae is just one of the better source materials, uses much less water than dry ag products, plus there is an abundant supply.
Pipelines for liquid/semi-liquid movement where it is not more economic to move by water or rail are much cheaper than truck even for ethanol. Corrosion and moisture affinity is no longer an issue with the new plastics available. The disadvantage for an ethanol pipeline is its limitation for only that product were other pipelines can carry multiple products.
Making ethanol from corn is a wasteful enterprise since it turns a high value high neg-entropy product useful for human food or animal feed (corn) into a lower value more entropic product (ethanol + DDGS + CO2 + energy released to fermentation) useful only for combustion (ethanol) or animal feed (DDGS). A pound of corn is worth more than a ton of gold if there is nothing to eat.
Ethanol production drives up the price of food worldwide and here in Urbana, it is a heavily subsidized product, and it causes the world poorest and hungriest people to suffer more deprivation as a massive chunk of the food supply is diverted to automobile fuel.
Cellulosic ethanol might be a reality someday if some way can be found to rapidly depolymerize cellulose. There are microbes and protozoa that can do it on a small scale. Now, where will you get the Cellulose? It will now require diverting food crop acres to cellulose crop acres and you are back to the same food or fuel dilemma.
That's the problem with mandates: they are almost impossible to eliminate once created. Subsidies for R&D can be withdrawn, and almost nobody (except perhaps some research labs) is hurt. Subsidies for the construction of plants can be ended, and all you've done is disappoint those who were hoping to benefit in the future. Subsidies for production of ethanol are more difficult to phase out, but strictly speaking they are time-limited. Congress can simply decide not to renew them when they expire. But it takes a brave politician, indeed, to say -- "OK, we mandated 36 billion gallons in 2022, but that doesn't mean we are going to require 36 billion gallons in 2023. Sorry, guys, but the party's over."
That's the problem with government involvements in the economy: they are almost impossible to eliminate once created.
The government in the economy is like the bull in the china shop. What they don't totally destroy they defoul.
Read The Shock Doctrine. You might end up with a different opinion.
Read The Shock Doctrine. You might end up with a different opinion.
Seems that I already have a different opinion from most of the pack,
but I can't understand why anyone should complain about free-market capitalism in today's economy because there is so much interventionism that free-market capitalism is seldom seen in the USA these days. It seems to me that Naomi Klein is just pushing socialism at us by complaining that Bush et al's brand of socialism has failed, and since it has failed, she wants to label today's socialism as free-market capitalism so that she can shove more socialism at us. I dont much trust Naomi Wolf either but of the 2 Naomis Ms Wolf strikes closer to the root.
Read Economics in One Lesson. You can find it here.