Another Ethanol Producer Goes Bust - CBO Report Says Ethanol Drive Food Prices Higher

[ensho]

http://counterpunch.com/bryce04162009.html


The recurring lesson emerging from the corn ethanol scam is this: too many mandates and subsidies are probably worse than none at all. Evidence of that can be found by looking at Aventine Renewable Energy Holdings, the Illinois-based ethanol producer. Last week, the company filed for Chapter 11 bankruptcy, saying it had $799.5 million in assets and nearly $491 million in debts.

Aventine, which has production capacity of 207 million gallons of ethanol per year, operates plants in Illinois and Nebraska. And Aventine’s bankruptcy won’t be the last in the ethanol sector. The ethanol producers are in a fundamentally untenable position: they are selling product into a market where gasoline demand is falling and corn prices are still relatively high.

What’s amazing is that Aventine and the other ethanol companies who’ve failed can’t make money even though Congress is giving them a fat subsidy -- $0.45 per gallon – and a mandate that requires gasoline retailers to use 12 billion gallons of their product this year. By 2015, that requirement will increase to 15 billion gallons.

The huge mandates and subsidies for corn ethanol resulted in a spending binge on new production capacity, much of which now sits gathering dust. According to Ethanol Producer Magazine, 37 ethanol plants now are sitting idle. Those plants have total output capacity of 2.2 billion gallons per year. And of those 37 plants, at least 23 have been built since 2005.

-snip-

The CBO study now brings the tally of reports which have made a direct connection between the corn ethanol scam and higher food prices to 16.
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scammed again. are we getting used to it yet?

[No More Bushbots]

1. Why do you hate American farmers?

Or is it the fact that they are selling a product that would have previously sat on the ground rotting to be used to free us from Big Oil?
That lie that ethanol production drives food prices up is straight out of the Big Oil playbook.
So I ask again, why do you hate American farmers? Or is it America in general?

[ensho]

2. I don't understand how you got to the point of thinking I hate farmers

could you explain your thinking

[Statistical]

5. Ethanol from corn is horribly inefficent and hardly "green"

Ethanol as a concept isn't bad but corn come on.

Ethanol from sugar cane is about 5x as efficient.
Ethanol from switch grass, or algae, or some other fast growing, low resource "crop" would be even better.

Ethanol production drove price of corn above virtually every other food staple.

Central VA = peanut country where NOBODY has grown corn ever starting growing corn.
Farmers realized they could make a lot more (200%-300%) by acre growing corn in VA.

Friggin VA. Yields are horrible but even w/ horrible yields + corn they made more than good yields and peanuts.


So as peanut production slows take a guess what happens to price of peanuts?

Saw interview on CNN where a cattle farmer previously grew his own corn as feedstock for his cattle.
Was more productive and cheaper than buying feed corn in bulk.

The corn he would have fed his cattle was worth MORE as corn then it was as cattle.
He was cutting back on his herd and selling some of the corn directly.

Ethanol can work but corn provides one of the worst conversion ratios.
Corn is a resource intensive crop and thus 1 gallon ethanol from corn will always require more resources than a gallon from sugar cane, or switch grass, or algae.

[elocs]

3. Yes, corn ethanol is a bad idea, but there are people who made money from it.

Like those who grow and process corn. They have a vested interest in keeping corn ethanol going. Follow the money. They grow a lot of corn in Iowa.

[Romulox]

7. Where is the first primary of the year held? Coincedence?

There are no coincidences. :hi:

[louis-t]

4. The "scam" is that ethanol production is

driving food prices higher. Two things that would make more corn available for food and energy: reduce the amount of corn syrup in food products across the board by 10%. This would also reduce the staggering diabetes rate. Second, stop forcing popcorn into people. Selling monstrous quantities at the movies, most of which ends up on the floor, is so wasteful. Some bars keep baskets on every table, the majority of which never gets eaten.

[hughee99]

6. I don't get what you're saying here.

If I understand correctly, you're saying that ethanol production isn't driving food prices higher. Then as a "remedy" you suggest corn usage be cut elsewhere.

If prices are high because there's high demand for corn, then ALL uses are partly responsible for the high prices (including ethanol production). You can cut usage anywhere to bring the price back down (the "plastic" beer cups used at sporting events and concerts are made from corn), but the problem is there's more demand than corn.

The question is, what are the best uses for corn? I don't think ethanol is one of them, there are other materials that can be used to produce ethanol more efficiently and are (currently) less in demand.