agriculture * food * energy * environment
Big oil has teamed up with livestock producers and fast-food restaurants to attack the ethanol industry’s efforts to increase the percentage of ethanol in fuel from 10 percent to 15 percent.
The EPA last month agreed to allow cars and trucks that are 2007 and newer to run on gasoline with 15 percent ethanol, a blend known as E15. Flexible fuel cars can operate using a 85 percent blend of ethanol and gasoline mixture.
Challenging the EPA’s action are the American Petroleum Institute and a series of livestock and food industry groups, including the National Pork Producers, National Council of Chain Restaurants and the American Meat Institute, in asking a federal appeals court to block the EPA’s E15 decision, according to a story in the Des Moines Register.
The story said that “gasoline refiners also may challenge the decision, as well as engine manufacturers and other sectors that have expressed concerns that misuse of E15 would damage motors.”
The motivate is pretty simple, corn prices are too high and cuts into the profitability of livestock producers, which in turns has an economic impact on meat producers, grocery stores and restaurants.
The ethanol industry has been one of the biggest economic drivers in Nebraska’s economy for the past 10 years. Ethanol production in Nebraska this year will be about 2 billion gallons using almost 700 million bushels of corn. Because of ethanol, corn prices aren’t stagant at well below the farmer’s cost of production forcing producers to take a government payment so they won’t go broke.
The growth of the ethanol industry has played a vital role in helping to keep Nebraska’s economy from diving deep into the recession as other state’s have. The increase in corn prices, along with increase in yields over the last five years has added billions of dollars to the state’s economy. And Nebraska’s ability to process that corn here in the state into ethanol has added additional billions of dollars to the state’s economy in increase economic activities.
Allowing E15 increases the growth curve of the ethanol industry in Nebraska and makes sure we add additional value to a crop we grow in the state, along with the livestock feeding industry. Diminsh the growth of the ethanol industry and lowering corn prices increases the need for government subsidies for farmers and halts the economic expansion of the state’s agriculture industry’s ability to add additional value to the crops we grow.
It also opens the door to increase addiction to fossil fuels that are imported into the United States thus adding to the trade imbalance and increasing the national debt. It opens the way to adding more pipelines across Nebraska to carry foreign crude for processing at U.S. refineries.
It also acts as a disincentive to increase alternative biofuel production. As demand for corn ethanol increases with adding more ethanol to the gasoline blend, the ability of the corn industry to meet those increase demands for ethanol will be strained. But because there will be increase demand that acts as an incentive to develop other forms of alternative biofuels to supplement the growing demand for the renewable fuel caused by increase useage of E15 and the increasing availability of E85 pumps across the nation for flex fuel vehicles.
So by killing E15, you kill the incentive of fulling immediate demand for a product by creating alternatives and leaving the corn ethanol infrastructure the burden of meeting increasing ethanol demand. Corn ethanol is a success because we have created an infrastructure to efficiently process and deliver the product to market. It’s only going to be because of demand for biofuels that there will be an incentive to invest in developing other sources at can be delivered the product at an economic advantage like corn ethanol.
Like wind, Nebraska is blessed with a lot of crop land. Our biggest crop in grass and some of that grassland, especially on marginal land not suited for conversion to crop ground, where alternative biofuel crops can be grown.
So kill E15 you are increasing this nation’s dependency on foreign oil, which in turn, increases the country’s debt.
In the story, Tom Buis, CEO of the ethanol trade group Growth Energy, is quoted saying that ”opponents of his industry were trying legal means to slow the growth of biofuel production because they have been “unable to dispute the overwhelming science in favor of E15.”
The story also said that “The EPA said its E15 decision was “based on strict adherence to the Clean Air Act and grounded firmly in science. The agency relied on numerous rounds of rigorous testing on 19 car models and, at every step, worked in close consultation with automakers and fuel suppliers.”
Now that the election is over, gasoline prices will probably be on the rise as oil company’s need more revenue to justify expensive drilling operations for non-traditional oil recovery operations, such as oil from tar sands or oil shale or deep water exploration.
And to get those expensive sources of oil to market they need pipelines carrying the oil to refineries that will process it into gasoline. One of those proposed pipelines for the expensive tar sand oil project in Canada is through Nebraska.
And according to a new analysis by the Natural Resources Defense Council, Nebraska is a logical place to put a oil pipeline, even though it will go through the Sand Hills and its vast aquifer beneath it.
In NRDC’s analysis, Nebraska ranked 48th in the nation by the analysis in doing the least to reduce its oil dependence, which is rather ironic, in the fact that the state ranks second in the nation in ethanol production, an alternative fuel designed to be a solution in easing America’s dependency on imported oil.
The fact is, Nebraska could be totally self-sufficient from any oil imports as the ethanol industry produces more ethanol annually than total gasoline useage in the state for a year. If all cars burned 100 percent ethanol, prices would be cheaper and there would be still plenty of ethanolto export to other states.
The 2010 edition of the annual report, “Fighting Oil Addiction: Ranking States’ Oil Vulnerability and Solutions for Change,” provides a detailed look at how oil prices affect consumers and ways in which smart policies can help break states’– and the country’s – addiction to oil.
“State lines shouldn’t lead to greater pain at the pump,” said Deron Lovaas, NRDC’s federal transportation policy director. “Smart transportation polices can reduce gas bills for all drivers, no matter where they live.”
The report calculates vulnerability to oil prices: how heavily each state’s drivers are affected by increases in oil prices. It also ranks states on their adoption of solutions to reduce their oil dependence – measures they are taking to lessen their vulnerability and to bolster America’s security.
According to the report, the 10 states most vulnerable to oil price increases are: #1 Mississippi, #2 Montana, #3 Louisiana, #4 Oklahoma, #5 South Carolina, #6 Texas, #7 Kentucky, #8 Utah, #9 Idaho, and #10 Arkansas.
The 10 states that are doing the most to promote clean energy technologies and reduce their dependence on oil are: #1 California, #2 Oregon, #3 Massachusetts, #4 New York , #5 Connecticut, #6 Washington, #7 Pennsylvania, #8 Minnesota , #9 New Mexico, and #10 Hawaii.
Meanwhile, the 10 states doing the least to reduce their oil dependence are: #50 Alaska, # 49 Wyoming, #48 Nebraska, #47 Ohio, #46 West Virginia, #45 Oklahoma, #44 Mississippi, #43 Kansas, #42 Alabama, and #41 North Dakota.
According to the NRDC, states that take steps for better transportation policies not only help reduce the country’s dependence on oil but also reduce their drivers’ vulnerability to oil price fluctuations.
“Looking at the trends from 2006 until now, we see some states pioneering solutions and taking action,” said Elizabeth Hogan, an analyst at David Gardiner and Associates who co-authored the report. “However, many states are still taking few, if any, of the steps listed in this report to reduce their oil dependence. States, and the federal government, must lead America out of our onerous oil addiction.”
Drivers in every state spent a lower percentage of their income on gasoline in 2009 than they did in 2008, largely related to the rise in unemployment and the economic meltdown, according to NRDC. Regardless, NRDC said that some states remain much more vulnerable to increases in oil prices than others.
“We shouldn’t have to wait for the economy to tank before we feel relief at the gas pump,” Lovaas said. “State and federal leaders, including new ones swept into office by the election this week, should adopt commonsense policies to get us off the oil-price rollercoaster for good.”
The report recommends that states take a proactive approach to transportation policies and that Congress enact “a fuel-saving transportation law without delay, one which fundamentally reforms federal transportation policy so it supports smart, transit-oriented development; assists states and regions in saving oil; and provides ample funding for energy-efficient transportation alternatives including rail and bus lines, bike paths, and sidewalks.”
“The Obama administration is on the right track with the new proposed fuel economy standards,” Lovaas said. “These should be set as high as possible and there are many other steps the administration, Congress, and the states can take to reduce the country’s oil use.”
Government subsidies have done rural Nebraska well over the decade.
For example, according to the USDA, agricultural cash receipts in Nebraska have gone up from nearly $4 billion, mainly due to government subsidies, which added to the state’s ability to weather the national recession better than most states.
The increase has mainly come from in the form of cash receipts for corn, which, according to the USDA, has gone up from $2.068 billion in 2005, to $4.85 billion in 2009. During that time, corn prices have gone up dramatically as the ethanol industry grew in Nebraska to where we now have around 25 operating ethanol plants producing more than 2 billion gallons of ethanol annually and using more than 600 million bushels of corn. Ethanol increased corn demand and the ethanol industry grew mainly because of the government subsidies that jumped started the industry.
Because of government subsidies to the ethanol industry, Nebraska has witnessed probably the greatest economic revitalization in years in new construction, job creation and adding value to the local and state economy. It didn’t happen because of the power of the free market. Because of oil’s dominance and its economical efficiency (that’s due to a large part due because of government subsidies) free market forces would have done little to promote this form of alternative energy. It was government incentives and mandates. As a result of those incentives, Nebraska’s economy has prospered to the turn of nearly $3 billion since 2005 in the growth of subsidies directly or indirectly tied to the corn industry.
What would have happened without the government subsidies? Corn would be still be under $2 per bushel? The livestock industry would still be the dominant sector of Nebraska’s ag economy (last year cash receipts for grain exceeded livestock).
But government subsidies add to the the national deficit, which voters Tuesday spoke pretty loud against (especially in rural areas of the nation that benefit greatly from government subsidies).
Rep. Adrian Smith, R-Nebraska, campaigned adamantly against government deficit spending and said he would oppose any direct or indirect earmarks for the Third Congressional District because of the greater need to get a handle on the nation’s growing $13 trillion plus deficit. Does that mean one of the biggest beneficiary of government subsidies – agriculture? Smith is a strong believer in the free market. The bigger question, though, is how well can agricultural stand alone in a truly free market system globally without some sort of government economic intrusion.
According to an Environmental Working Group (EWG) analysis of the 2010 mid-term election results shows that for “…besieged rural Democrats, voting for the 2008 Farm Bill and its lavish subsidies for the largest and wealthiest agribusiness operations failed to shield them from the Republican wave.”
According to the analysis, at least15 Democratic members of the House Agriculture Committee lost, including “ardent subsidy defenders Stephanie Herseth-Sandlin of South Dakota and Earl Pomeroy of North Dakota.”
According to EWG, ”In all, 46 Democratic seats flipped that rank in the top half of farm subsidy receiving congressional districts listed in EWG’s farm subsidy database. A loss of 39 seats was needed to flip the House, so the margin was more than given away in rural agriculture districts.”
The analysis said that “ The Democratic losses contrast with the fate of House Republicans from subsidy-heavy districts who survived the Democratic wave election of 2008 even though they voted against the 2008 bill, citing their commitment to cut federal spending and budget deficits.
EWG said that “Democratic Sen. Blanche Lincoln of Arkansas, a champion of big government benefits for large-scale commodity producers in her state and chairwoman of the powerful Senate Agriculture Committee, was handily defeated in her reelection bid. Her loss follows past defeats of agriculture-minded Democrats in leadership positions such as former Senate Majority Leader Tom Daschle of South Dakota in 2004, Speaker of the House Tom Foley, former Secretary of Agriculture and Kansas Representative Dan Glickman in 1992, and former House Agriculture Committee member Charles Stenholm from Texas in 2004.”
“Democratic incumbents’ support for outdated and expensive farm subsidies clearly wasn’t enough for rural voters when they made their choices on Election Day,” said Craig Cox, EWG senior vice-president. “If anything, this is a wakeup call that there is a negligible political benefit to toeing the subsidy lobby’s line.”
According to EWG, “The 2008 Farm Bill debate was heavily influenced by a disparate coalition of groups, including taxpayer, hunger, nutrition and environmental advocates, that pushed to reform the current system of government payments that flows disproportionately to the largest growers of commodity crops such as corn and cotton. The reform effort was blunted in part by a Democratic House caucus that followed Speaker Nancy Pelosi’s political calculation of embracing the agribusiness agenda.”
“Republicans now in power in the House, including the presumptive new House leader, John Boehner, who voted against the 2008 Farm Bill, are in a position to finally reform farm subsidies, especially given their calls for less spending and smaller government,” Cox said.
“The first test of the new order in Washington will come in the lame duck session of Congress,” Cox added, “as Republicans, moderate Democrats, and the White House respond to the ethanol lobby’s demand for $6 billion per year in new subsidy spending.”
Keep a close eye on how these peculiar developments play out, especially in Nebraska’s Third Congressional District who has been a huge benefactor of government farm subsidies.
With all the public rage about out of control government spending, one area that doesn’t get a lot of public attention is the huge amounts of taxpayers dollars spent on corporate subsidies, whether it’s on the local, state or national level.
While politicians rage about government intrusion into such things as health care, little is probably known how government subsidizes companies that sell private health insurance. A company that sells private health insurance can take a government check as long as they promise to create new jobs.
The Huffington Post, recently reported, that while national health care reform has politicians and business raging about the the additional business expense it will create to have healthy employees, “The crime that reform is guilty of: Slashing corporate welfare.”
According to Huffington Post, “Under the previous system, major corporations were subsidized by the government to provide prescription drug coverage to their retired employees. At the same time, corporations could claim on their tax returns that it was they — not the taxpayers — who paid for the drug coverage, and could write the expense off as a tax deduction.
“Health care reform cuts out that fat. The corporations still get taxpayer money to help pay for their drug coverage, but they can no longer continue the fiction that they’re using their own money to do it.”
No wonder the rich rails about tax hikes. On 60 Minutes the other night, David Stockman, President Reagan’s former budget chief said that: “In 1985, the top 5% of the households – the wealthiest 5% – had net worth of $8 trillion – which is a lot. Today, after serial bubble after serial bubble, the top 5% have net worth of $40 trillion. The top 5% have gained more wealth than the whole human race had created prior to 1980.”
They may be against tax increases on their growing wealth, but they are open to government subsidies in the name of job creation, when governments, local, state and national, are facing huge cuts to vital social services to help the growing legion of people living from paycheck to paycheck.
Is this the hidden message of this year’s political races, Let use public treasure to create private wealth, not so much for the working class or the middle class, but for those 5 percent “who have gained more wealth than the whole human race had created prior to 1980.”
And it is not just the United States that subsidies rich corporations, such as the oil industry.
According to a report from the International Institute for Sustainable Development, Canadian federal and provincial governments provided $2.84 billion to support oil production in 2008.
According to IISD, the report estimates the impact of existing subsidies over the next 10 years. The study forecasts the cost of subsidies to governments would double by 2020. The report estimates a 2 per cent rise in Canada’s greenhouse gas emissions by 2020 and a projected rate of growth for the oil production industry.
As a member of the G20, IISD said “Canada has recognized that efforts to deal with climate change, wasteful energy consumption, market distortions and barriers to clean energy investment are undermined by inefficient fossil-fuel subsidies and has pledged to phase out its inefficient fossil-fuel subsidies over the medium term.”
IISD said that “The federal and provincial governments have already made progress in reducing the level of subsidies and incentives to the oil production industry, though a number of significant subsidies remain and new ones have emerged.”
According to the study, IISD said the federal government’s share of subsidies in 2008 was $1.38 billion. Within the provincial governments, Alberta was estimated at $1.05 billion, Saskatchewan at $327 million and Newfoundland & Labrador at $83 million. A total of 63 subsidy programs were identified.
”In most cases, the subsidies were intended to increase exploration and development through a mix of tax breaks and royalty reductions,” according to IISD.