Posted 12/14/2011 06:08:00 PM by Douglas

I've ranted on this topic before, but every year that goes by where seemingly everyone is aware of the sheer lunacy of creating ethanol as fuel while we're still subsidizing it with billions of public dollars, well, that tends to wonder why everyone hasn't, as I have, completely lost faith in the system. We've already established, by their own reports that ethanol is a thermodynamic loss, meaning it takes more energy to create it than you can get by burning it. Hell, even Al Gore has come out against it for being unfeasible. Yet the money keeps flowing. Now it's coming from oil companies for not buying enough of the stuff. Nevermind the fact that it doesn't exist.

To launch this wonder-fuel industry, the feds under Mr. Bush and President Obama have pumped at least $1.5 billion of grants and loan subsidies to fledgling producers. Mr. Bush signed an energy bill in 2007 that established a tax credit of $1.01 per gallon produced.

Most important, the Nancy Pelosi Congress passed and Mr. Bush signed a law imposing mandates on oil companies to blend cellulosic fuel into conventional gasoline. This guaranteed producers a market. In 2010 the mandate was 100 million barrels, rising to 250 million in 2011 and 500 million in 2012. By the end of this decade the requirements leap to 10.5 billion gallons a year.

When these mandates were established, no companies produced commercially viable cellulosic fuel. But the dream was: If you mandate and subsidize it, someone will build it.

Guess what? Nobody has.

It gets worse. Because there was no cellulosic fuel available, oil companies have had to purchase "waiver credits"—for failing to comply with a mandate to buy a product that doesn't exist. In 2010 and this year, the EPA has forced oil companies to pay about $10 million for these credits. Since these costs are eventually passed on to consumers, the biofuels mandate is an invisible tax paid at the gas pump.

So, yay? Billions get paid out to snake-oil selling start ups under both the Bush and Obama administrations, and the taxpayers have to pay for it? Where have I heard this before?

To recap: Congress subsidized a product that didn't exist, mandated its purchase though it still didn't exist, is punishing oil companies for not buying the product that doesn't exist, and is now doubling down on the subsidies in the hope that someday it might exist. We'd call this the march of folly, but that's unfair to fools.

Sleep tight America, the government is in control and going to solve all your problems. Just remember, it's Ron Paul that's the "crazy one" when he says that the federal government has no business doing this stupid shit. All the rest of them think they can "fix" this.

Labels: ethanol