Thursday, July 10, 2008

Corn-A-Holing the Corn-A-Holers

Here's the Schadenfreude post-of-the-day, and you will love it.

Headless:

Considering the relative price of corn versus oil and also that the subsidy on ethanol does not increase with increasing corn prices, it may be possible for corn to become too expensive to sell ethanol for a profit.

And he quotes a report:

...operating ethanol plants are feeling the pain of declining profitability if not outright losses. The astronomical price of crude oil has caused gasoline and ethanol price to rise, but corn price has risen even more on a percentage basis. Some smaller plants, plus a few larger plants that were having trouble with financing arrangements, have already shut down. A recent article reported that 16 ethanol plants either were in bankruptcy or were preparing to file for bankruptcy.

The downside? Once again, Your Government (Wisconsin) at work:

The issue for states where mandated ethanol is sold, is that ethanol prices will be forced to rise to make it profitable. Consider it another tax imposed by a government that sells public policy to the highest bidder, in this case to corn producers.

So if I am a radio station selling airtime to the Corn-A-Holers, I'd get a quick D&B credit report--or get cash up front.

4 comments:

Thomas Joseph said...

As I've mentioned in my blog, there is a lot of buzz about using algae for biodiesel production. Building up the infrastructure will be expensive (not as if petroleum wasn't when it first came online) but it uses about 15% of the land that would otherwise be used for corn/sugarcane/other food crop. This would allow us to use our cropland for growing crops which will FEED us, thereby reducing food costs.

Disgruntled Car Salesman said...

If there was money in refining grease and the government wasn't opposed to diesel because of it's superior mileage capabilities, among other things, we would have an economically viable fuel alternative that wouldn't require major reconstruction of our current infrastructure.

Of course, common sense and government aren't synonymous.

3rd Way said...

And how exactly is the government constricting diesel production?

Disgruntled Car Salesman said...

The government isn't encouraging biodiesel production like they are encouraging corn-a-hol. The subsidies aren't there. Additionally, the government restricts how many diesels vehicles can be imported into our country. VW can attest to that. Furthermore, the government has imposed ridiculous emission requirements on diesels forcing them to be cleaner than most gasoline cars. VW overcame that with their new clean diesel '09 Jetta TDI, but it took them three model years to achieve it. We won't have that car until September, and the last model we had was '06.