Animal’s Daily Ethanol Subsidy News

I’m a big fan of ethanol.

That is, ethanol in the form of a good Scotch or a nice rye whiskey.  Ethanol has some advantages when blended into gasoline, true enough; but why the hell is the government subsidizing it?  Why not let ethanol fend for itself?  Excerpt:

The East Coast’s largest and oldest oil refinery is declaring bankruptcy. In its January 22 filing, Philadelphia Energy Solutions (PES) — whose facilities can process 335,000 barrels of oil per day — cited the economic burden of complying with the Renewable Fuel Standard (RFS) as a primary contributor to its fiscal woes. Regardless of the merits of PES’s claims, the RFS is an economic and environmental burden on the United States and ought to be repealed.

The RFS, first passed in 2005 and expanded in 2007, mandates that fuel blenders mix ethanol into fuel supplies at increasing levels until 2022. Interest in ethanol peaked during the George W. Bush administration for an amalgam of reasons stretching from rising oil prices, to a belief that plant-derived fuels would be environmentally superior to fossil fuels. With ethanol production then sitting at just a few billion gallons, the law sought a 10-fold increase in ethanol production over less than two decades. In the early years of the policy, complying with the standard was fairly inexpensive. Renewable Identification Numbers (RINs), the tradable compliance credits generated when ethanol is produced, sold for 10 cents or less.

Sometime within the past few years, the fuels industry began to heave under the pressure of steadily mounting RFS requirements. With the exception of rare 85 percent ethanol pumps only usable by specially-designed engines, U.S. pumps can generally only sell blends up to 10 percent. This puts a hard cap, referred to as the “blend wall,” on how much ethanol can realistically be blended.

Full disclosure:  I come from a long line of farmers.  The Old Man farmed for much of his life, and both of my grandfathers farmed, although one of them gave it up for a career as a Ford mechanic.  So I know a little bit about farming and farm life.

With that said:  There is a tendency among some well-meaning folks, including plenty involved in agribusiness, to consider farming as a sort of holy calling.  It isn’t.  Yes, it is a vital industry.  Modern technological societies can’t exist without industrialized agriculture.  But farming is a business like any other.  Methods and technologies change, and the best way to determine which changes are economically feasible is not government; it is the free market.

Yes, the ethanol subsidy should end.  All such subsidies should end.