Thursday, July 17, 2008

Bill Foster on Ethanol (What's he say on imported ethanol?)

Msg to Foster Staff: If Foster has a position on that tariff on Brazial Ethanol Durbin and Obama have supported, please send it to me and I will publish. From his site on ethanol,

There are both opportunities and dangers in biofuels. Here are two examples that indicate how the 14th District is dependent on the technological and business sense in Congress:

1. Over-Subsidization of Corn-to-Ethanol Plants. The large subsidies for corn-based ethanol plants is causing large numbers of them continue to be built even thought they are known to be non-competitive in the long term. To understand how serious the situation is, consider that by some estimates, when all of the planned corn-to-ethanol plant capacity is built, Iowa will become a net importer of corn. Those most likely to be hurt when the ethanol "bubble" bursts are not the large agribusiness and large-scale producers of ethanol, but the small groups of independent farmers who have banded together to invest in small scale corn-to-ethanol operations.

2. Which Biofuel Should Congress Invest in? It is far from clear that ethanol is the best long term bio-energy fuel. Other bio-fuels (such as butanol or 2,5-Dimethyl Furan) get more miles per gallon than ethanol and they do not corrode piping and storage tanks. However, the House of Representatives recently passed legislation providing money to upgrade piping and storage to avoid the corrosion problems of ethanol. If the final best choice for biofuels is not ethanol but some less corrosive fuel, then much of this money will have been misspent. As always, good business judgment is essential.
Right now I'd say Durbin and Obama want Congress invested in ADM and that convinces me it would be best to get Congress out of the investment business all together and leave this one open for market solutions. Right now... I'm betting on much more misspending.

xp Bill Baar's West Side

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