The Burning Platform produces here another of its comprehensively documented blog posts. It asks, "How many Senators does it take to screw a taxpayer?" It is referring to the costs of government-mandated ethanol. Here is how the cartoonist arrived at the above-six dollars per gallon of gasoline cost of Ethanol.
Real Cost For A Gallon Of Corn Ethanol
Corn Ethanol Futures Market quote for January 2011 Delivery $2.46
Add cost of transporting, storing and blending corn ethanol $0.28
Added cost of making gasoline that can be blended with corn ethanol $0.09
Add cost of subsidies paid to blender $0.45
Total Direct Costs per Gallon $3.28
Added cost from waste $0.40
Added cost from damage to infrastructure and user’s engine $0.06
Total Indirect Costs per Gallon $0.46
Added cost of lost energy $1.27
Added cost of food (American family of four) $1.79
Total Social Costs $3.06
Total Cost of Corn Ethanol @ 85% Blend $6.80
None of these figures take into account the effect on the world's poor of the high cost of corn.
4 comments:
Like most of these touchy issues, this collection of facts isn't complete. What about the sale of the leftover material after the alcohol has been brewed? It's fed to livestock just like milled or steam flaked corn, and really - it makes better feed because it's utilized better by ruminants than regular dent corn. Aaaand, when was the last time you ate dent corn?
Yes, there is a market cost increase, and perhaps less soybeans are grown because of the demand. Translating corn "lost" to alcohol production isn't as direct a path as the naysayers claim.
I won't argue the main point - that if the subsidies didn't exist, we wouldn't have the gasohol production that we do. I've got mixed emotions about the long term strategy - as far as economics go, I'd rather see us sink money into more refineries without having to go through twenty years of regulatory approval from greenies. That way, we could manage the extra oil we'd be drilling like mad for out of the Bakken oilfield.
Our oil processing infrastructure has been allowed to deteriorate and diminish over the years. The numbers of refineries have declined sharply, but production hasn't followed directly because of production improvements gained from new technology.
We hear about the Bakken a little bit once in a while, but there is another field "underneath" it as well. I was on a site several months ago talking to one of the well inspectors. That site had four wellheads. A couple of them were drawing from two different depths at the same time.
Another part of the problem is that we need more pipelines, too. Northeastern Utah and NW CO have quite a bit of production, but all the oil has to be trucked out of there. It's also got a lot of sulfur in it - it's not "sweet" crude that's easy to refine.
Our energy policy seems to be to kill the evil oil industry and put all our eggs into pie in the sky ventures hoping that technology will rescue us - alcohol from corn, wind energy, biofuels and so on. And what is odd to me is that the greenies don't seem to notice that the "oil" companies are in fact energy companies who are researching and investing in new tech, and they will run the show even if we do get away from oil.
Jeffro,
It is great to get your perspective. I certainly realize my blog post was not a complete collection of facts on the subject, and I am very glad you added so much hands-on knowledge to the discussion.
For all I know, the rest of the data presented is accurate - but as with most of these things, since they obviously presented only one side, I have to doubt the whole presentation.
Still, we need to question the whole idea of an ethanol industry. I'd just like to read an unbiased report some day.
Bottom line: the gov't is out to screw us.
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