Ethanol: Paying Taxes to Get Higher Gas Prices

Ethanol a huge lie? How can this be? What does it mean? Where is this proven? All very good questions that should have been asked when this very expensive fuel additive first began to raise its ugly head. Ethanol is not a huge saving and does not stop pollution (in fact, it ads to low-level ozone, which makes it hard to breath on hot days and causes smog-related breathing problem). Ethanol produces more problems than it solves. It has costs that cannot support it as a stand-alone industry, so our government gives the Ethanol producers big money to keep producing a fuel that will only save maybe 10% of total fuel use and that comes with heavy prices to our environment, our food, and, most important of all, our health.

Author Walter Williams states:

One of the many mandates of the Energy Policy Act of 2005 calls for oil companies to increase the amount of ethanol mixed with gasoline. President Bush said, during his 2006 State of the Union address, “America is addicted to oil, which is often imported from unstable parts of the world.” Let’s look at some of the “wonders” of ethanol as a replacement for gasoline.

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Ethanol contains water that distillation cannot remove. As such, it can cause major damage to automobile engines not specifically designed to burn ethanol. The water content of ethanol also risks pipeline corrosion and thus must be shipped by truck, rail car or barge. These shipping methods are far more expensive than pipelines.

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Ethanol is 20 to 30 percent less efficient than gasoline, making it more expensive per highway mile. It takes 450 pounds of corn to produce the ethanol to fill one SUV tank. That’s enough corn to feed one person for a year. Plus, it takes more than one gallon of fossil fuel (oil and natural gas) to produce one gallon of ethanol. After all, corn must be grown, fertilized, harvested and trucked to ethanol producers—a ll of which are fuel-using activities. And, it takes 1,700 gallons of water to produce one gallon of ethanol. On top of all this, if our total annual corn output were put to ethanol production, it would reduce gasoline consumption by 10 or 12 percent.

So here is what Ethanol does not do: Ethanol does not eliminate water, a very bad ingredient in any engine and one that destroys a small engine like that of a lawn mower. The water content in Ethanol hurts small engines to the point of destruction. Boat outboard motors, in some cases, have to be rebuilt, due to the water content in Ethanol that goes through the engine.

We have to make a special note here to inform everyone why gasoline without Ethanol costs so much to buy: the high cost is due to a heavy fine placed upon gasoline refineries for not adding Ethanol to the gasoline. Ethanol has to be added at the fill station because it cannot be allowed to sit in any pipe, as, if it does, it will extract water into it. All oil refineries pay a fine for selling gasoline without Ethanol in it, and that fine is used to pay the Ethanol refineries subsides so they can make a profit on the taxpayer’s back.

Williams, in his article, informs us that Ethanol contains water that cannot be removed. He should also have mentioned that Ethanol acts like an attractant for water, and if it is stored in any sort of container, water will find its way into the Ethanol. That water that gets into the Ethanol is not like most water—it draws out a corrosive action for metal that eats the metal away, and that is one reason Ethanol cannot be shipped in pipelines or stored in containers for nearly any period of time. Williams states that Ethanol has to be shipped by truck, rail car, or barge which ads to the cost of Ethanol production costs. That corrosive action destroys the small lawn mower engines, outboard motor engines and some vehicle engines.

Williams then goes on to state facts about Ethanol that very few reporters ever wish to mention and that the government likes to hide: that Ethanol is 20 to 30 percent less efficient that gasoline, due to its inefficient burning, making it more costly to use per highway mile. Additionally, he says that it takes about 450 pounds of corn to fill up an SUV, which is 450 pounds of food taken off our tables for every SUV on the road—enough to feed an individual for a full year. Williams adds that it takes more than a gallon of fossil fuel to produce just one gallon of Ethanol (he may be underestimating that a bit, since it comes close to a gallon and a half to produce just one gallon of Ethanol), which does not seem to be an economical way to go. Despite this fact, our government still wants us to do this. Wonder why?

The answer to this question can be found by finding out who gets the most out of this deal of a bad fuel: the producers of the corn get $9.5 billion to send their corn to the Ethanol refineries. So farmers stand to make a lot more by sending their corn to the Ethanol refineries than by sending it to our tables. But we still have to pay for that corn by giving them subsides, which come from our tax dollars, so we are paying our farmers not to give us corn for food on our tables through taxes we pay, then we pay taxes on that at the pump, and, once more, through subsides to the Ethanol refineries so they can stay in business. What a vicious cycle of taxes that we should not provide!

Let us finish this by stating that Ethanol may be the death of us all if we continue to allow this to build. In the last part of Mr. William’s article he shows us some things that we should consider the next time we buy Ethanol.

Ethanol production has driven up the prices of corn-fed livestock, such as beef, chicken and dairy products, and products made from corn, such as cereals. As a result of higher demand for corn, other grain prices, such as soybean and wheat, have risen dramatically. The fact that the U.S. is the world’s largest grain producer and exporter means that the ethanol-induced higher grain prices will have a worldwide impact on food prices.

It’s easy to understand how the public, looking for cheaper gasoline, can be taken in by the call for increased ethanol usage. But politicians, corn farmers and ethanol producers know they are running a cruel hoax on the American consumer. They are in it for the money. The top leader in the ethanol hoax is Archer Daniels Midland (ADM), the country’s largest producer of ethanol. Ethanol producers and the farm lobby have pressured farm state congressmen into believing that it would be political suicide if they didn’t support subsidized ethanol production. That’s the stick. Campaign contributions play the role of the carrot.

The ethanol hoax is a good example of a problem economists refer to as narrow, well-defined benefits versus widely dispersed costs. It pays the ethanol lobby to organize and collect money to grease the palms of politicians willing to do their bidding because there’s a large benefit for them—higher wages and profits. The millions of gasoline consumers, who fund the benefits through higher fuel and food prices, as well as taxes, are relatively uninformed and have little clout. After all, who do you think a politician will invite into his congressional or White House office to have a heart-to-heart—you or an Archer Daniels Midlands executive?

Now with all this said, in the next town hall with your Representative or Senator, ask them why we continue to go with Ethanol when it does not contribute enough to sustain its own platform. The Ethanol industry is performing a huge hoax on the American public, and this should never sit well with any voter or person who buys Ethanol-spiked gasoline. It also shows one particular group that has a large lobby shoving money and threats to Congressional people if they even think of eliminating Ethanol due to its huge damage to our environment. The top dog of special interest groups with that is Archer Daniels Midland, and I am sure that Senators and representatives from all over have some sort of contribution from them in their coffers. That alone has to make one think, “Why do we elect these people if, once they get to Washington, D.C., all they think about are those lobbyist that walk into their offices? “And to think that we could have lower gasoline prices at the pump, have more food on the table, and be able to breath a much lower level ozone without Ethanol. Yes, maybe it is time to ask the questions about Ethanol.

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