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By Robert Rapier on Feb 18, 2010 with 37 responses

Looks Like I Struck a Nerve

I started to notice a trend in the comments following my latest Forbes essay about the redundant nature of ethanol subsidies now that mandates via the Renewable Fuel Standard (RFS) are in place. Several comments in a row seemed to be regurgitated talking points that were just red herrings with respect to the point I was making. I knew that meant that somewhere a call had gone out to ethanol supporters to speak out against me. I now know the source, and at the end of this essay, I offer a debate challenge to the organization that issued the talking points.

To review, my point is simple. Someone said that it would be great if I could reduce it to a talking point, so here it is: Mandating ethanol while also subsidizing it is like paying people to obey speed limits.

If that isn’t self-explanatory, here is the logic behind the analogy. We have laws that govern the speed limits on our roadways. You can be penalized if you violate these limits, thus there is an enforcement mechanism in place that compels people to obey the law.

This is the same as the ethanol mandate. We have a law in place that directs refiners to blend a certain percentage of ethanol into their fuel. There are penalties for failing to meet those mandates, thus there is an enforcement mechanism in place.

Now would anyone think it was a good idea if we started using tax dollars to pull people over and pay them for complying with speed limits? I think most people would agree that this would qualify as a stupid idea and a waste of taxpayer money – especially when you consider that some government agency would have to run and audit the program for compliance. It would certainly be redundant given that there are already penalties in place for failure to obey.

With the ethanol subsidies, we are paying people to obey the speed limit. And the ethanol lobby was a little concerned that I had called attention to that fact. Turns out that Growth Energy, the ethanol lobbying organization whose co-chairman is General Wesley Clark, issued the following talking points to their members and asked them to rise up in a groundswell of opposition.

An excerpt from the e-mail they sent out (courtesy of this link):

Here are some points to consider, and remember to use these in your own words:

* What Rapier is suggesting boils down to a tax increase on an innovative, domestic energy industry. Does Forbes really endorse raising taxes in this tough economic climate? Does Rapier really think raising taxes on an emerging industry is smart?

* With domestic, green energy the likely source of hundreds of thousands of new jobs in the United States, why would Forbes and Rapier force a job-killing tax increase on ethanol?

* If Rapier is so eager to tax American energy companies, why not end the massive tax subsidies and tax breaks that Big Oil and gas companies get? By some estimates, the oil and gas industry will get around $29 billion in tax breaks from 2008 to 2013. That’s an enormous handout to an industry that sends a billion dollars a day overseas – often to countries that are hostile to the United States.

* If the choice were to give a tax credit that helps an American farmer and an American engineer in an American ethanol plant, or giving a tax break to an oil man who is doing business in the Middle East, I’d rather the tax credit stay here on American shores..

* The VEETC has reduced farm payments and increased tax revenue that completely offsets whatever the cost of that tax credit is – and in fact generates additional revenue for the federal treasury. In 2007, the $3.3 billion VEETC costs saw farm payments reduced by $8 billion, and generated $8 billion in tax revenue, according to an Iowa State University study.

That is absolutely priceless. None of those talking points actually address my argument. But apparently they were counting on some of their members not being able to think for themselves and just go out and repeat the talking points. So, a few showed up at Forbes and did just that. I answered each one of them – pointing out the obvious flaws in their thinking -  and of course none of them responded because they didn’t have anyone telling them what to say. 

But hey, I am a big boy. I can take the heat. Let’s take their talking points and address them, just to show how silly they are.

Point 1: What Rapier is suggesting boils down to a tax increase on an innovative, domestic energy industry.

Response: Right. Taking a tax credit away that is collected by the oil companies – which last year amounted to about $5 billion – and giving it back to taxpayers is a tax increase. That’s straight out of Lobbying 101, where up is down and green is red if that’s what your client wants.

I would love for someone to walk me through just how this amounts to a tax increase on this “innovative, domestic energy industry.” Anyone? Remember, the oil companies are still mandated to blend the same amount of fuel, whether they collect a subsidy or not. Point 1 – as silly as it was – refuted.

Point 2: With domestic, green energy the likely source of hundreds of thousands of new jobs in the United States, why would Forbes and Rapier force a job-killing tax increase on ethanol?

Response: Repeat the “tax increase” canard, and hope it begins to take hold with their members (and hopefully the public). “This guy wants to raise our taxes!” Remember, at issue here is $5 billion (and rising) of taxpayer money that is being paid out in unneeded subsidies. Eliminating that is a tax increase in their world? There are no words.

Point 3: If Rapier is so eager to tax American energy companies, why not end the massive tax subsidies and tax breaks that Big Oil and gas companies get?

Response: This one is a beauty. First, the point is completely irrelevant, given that the oil companies would still be under mandate to buy the product. Whether they are being subsidized by a trillion dollars a year has no bearing at all on this argument, as it doesn’t impact how much ethanol they are mandated to buy. It is just one more red herring.

But the really funny part about this point is the oil companies are the ones receiving the subsidy in this case. The ethanol industry has told us that many times. If Growth Energy is suggesting we get rid of oil company subsidies, aren’t they just making my point for me?

It wasn’t so long ago that Brian Jennings, the executive vice president of the American Coalition for Ethanol – a fellow ethanol lobbying organization (there seem to be quite a few) – said matter-of-factly that the blender’s credit does not benefit ethanol producers, that “it is actually an incentive the petroleum industry receives for blending ethanol into gasoline.” Vinod Khosla has made the same argument. Here he is on this issue:

Ethanol has a subsidy, but the farmer doesn’t get any of that. What I heard, is that well past midnight when this was being debated in the conference committee, the oil companies inserted 2 words into the language, calling this subsidy a blender’s credit. So the person who is blending it with gasoline gets it. All $2 billion of it last year [2005] was collected by the oil companies. Like they needed more money.

So which is it, ethanol lobby? How exactly is a credit received by the oil industry for complying with a law to blend more ethanol supposed to benefit the ethanol industry? Are you afraid the oil company wouldn’t blend the ethanol if the subsidy wasn’t there? I know I am repeating myself, but you don’t seem to get it: They are compelled to do so by law regardless. Finally, why do you wish to protect the subsidy when members of the ethanol lobby have pointed out that it is really an oil company subsidy?

Point 4: If the choice were to give a tax credit that helps an American farmer and an American engineer in an American ethanol plant, or giving a tax break to an oil man who is doing business in the Middle East, I’d rather the tax credit stay here on American shores.

Response: But doesn’t the “oil man” get this tax credit? You guys are talking out of both sides of your mouth, and it isn’t a pretty picture. I think you have set a record for red herrings in a response.

Point 5: The VEETC has reduced farm payments and increased tax revenue that completely offsets whatever the cost of that tax credit is…

Response: Irrelevant even if true, because once more I remind you that the blender still has to buy the ethanol. So if it really had the offsets you claim, that won’t change by eliminating the subsidy.

If that’s the best you have, then I can safely conclude that the emperor has no clothes. You didn’t address my arguments at all, because you know you can’t. Of course people might be curious as to why you have responded in such a way, but I know why you did. The last thing you want is for people to confront the costs of ethanol at the pump, where they might start to think that our ethanol policy isn’t such a good idea after all. That is what you truly fear.

In conclusion, I would like to issue a debate challenge to Growth Energy. Instead of hiding behind e-mail messages to their members, I challenge them to take up a three-round written debate on the matter. I propose the following:

Resolved: Implementation of the RFS negates the need for the tax credit.

If you are up to it, pick the best person from your organization. Better bring your “A-Game”, though. Or, if that e-mail represents your “A-Game”, you might as well forfeit now.

  1. By Maury on February 18, 2010 at 9:14 pm

    You don't see the relevence Robert? If your blog got 50,000 comments in the last few years,45,000 of them were complaints about ethanol subsidies. Many of your posts and most of your comments are about ethanol subsidies. Only,ethanol isn't the only form of energy being subsidized. The tax rate on timber was cut from 35% to 15%. It's right there in the farm bill next to the ethanol legislation.

    That someone working on turning timber into fuel doesn't know about that little giveaway has me scratching my head. I wouldn't expect you to go on about it every day if you did. People rarely sound off against their own interests.

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  2. By Robert Rapier on February 18, 2010 at 9:52 pm

    You don't see the relevence Robert? If your blog got 50,000 comments in the last few years, 45,000 of them were complaints about ethanol subsidies.

    Maury, I expect a bit more from you than this. This is really pathetic. First, I don’t complain about ethanol subsidies. What I do say is that the only reason the industry exists is because of the subsidies, and here I pointed out that they are redundant with the RFS in place. So please document your comment above. I think it would be much better if we didn’t subsidize any of these alternatives, and instead raised the price on fossil fuels. That avoids the picking of specific technology winners.

    Many of your posts and most of your comments are about ethanol subsidies.

    Only about 10% of the posts on this blog are specifically about ethanol – the largest source of alternative fuel in this country – so you are either confused, have a short attention span, or are lying to make a point. None of the options are flattering.

    Only, ethanol isn't the only form of energy being subsidized.

    All forms of energy generally get subsidized in one way or another. I think we have established that. But the subsidies are unevenly applied, which is why higher fossil fuel prices would work better.

    That someone working on turning timber into fuel doesn't know about that little giveaway has me scratching my head. I wouldn't expect you to go on about it every day if you did. People rarely sound off against their own interests.

    Well you see, that’s where you are confused. I don’t turn timber into fuel. I am not in the timber industry, and I have zero timber interests, so I don’t know why you expect me to be familiar with timber legislation. Further, our projects aren't U.S.-based. So take your ad hom and cram it. It has about as much relevance as me attacking you for sugar subsidies because of where you live.

    My suggestion is for you to disengage before you continue down this path. I have warned you that we don’t do smears here, and that’s all you are doing.

    RR

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  3. By Maury on February 18, 2010 at 9:57 pm

    "I am not in the timber industry, and I have zero timber interests"

    I must have you confused with the guy whose company is paid to manage forests. My bad.

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  4. By Robert Rapier on February 18, 2010 at 10:27 pm

    I must have you confused with the guy whose company is paid to manage forests. My bad.

    Maury, you are a jerk. I warned you to stop, but if you want to keep throwing mud, I will respond.

    We have a forestry company, and they manage forests. They are not a timber company. Further, the forests they manage are not in the U.S.

    So, jackass, do you want to tell me once more why I should keep up with timber legislation in the U.S.?

    Don't ever pull that again. If you have an argument to make, make it. If you want to toss insults and ad homs at me, and accuse me of tailoring my writing based on my profession, then you are in the wrong place buddy.

    RR

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  5. By PeteS on February 18, 2010 at 10:37 pm

    Rufus said: "Oh, I see; you brought them up, but then when I answer you decide to "skip" them on the grounds of not being the American that, presumably, you were when you brought them up the "First" time. or something"

    Rufus, I didn't bring up the two points in question, which were:

    "I don't know how anyone can "debunk" a war that's on our television screens every night."

    Your ORIGINAL point, which I suggested RR had debunked was about "subsidizing Exxon, and the Saudis with hundreds of Billions of Dollars". That may be associated in your mind (or you may have just been making a polemical argument) with wars on your television screen, but please note that was NOT something *I* ever mentioned. If you're actually INVITING me, a non-American, to comment on your wars, then I may have to disappoint those here who expect me to be your typical European, and say that I don't believe those wars are directly concerned with oil, and I am more than pleased to see America take such a lead role in world affairs and believe Europe has moral and financial obligations to do more to help.

    Your second point was about being a patriotic American. Again, I find it hard to believe you really want me to comment since you obviously don't need my blessing, but yeah, patriotism is absolutely fine by me.

    RR said: "Well, Pete, it isn't like we have never weighed in on European policies. :-) "

    I like to think I'm too polite to use it as an excuse to abuse Americans in your comments. Well, ok, maybe using the Cockney rhyming slang "Septic Tanks" was a bit cheeky in response to Kinuachdrach's "EUnuchs". :-)

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  6. By rufus on February 18, 2010 at 10:39 pm

    Yeah, Maury, nobody here accuses ethanol supporters of being "lobbyists, and shills."

    Oh, . . . wait

    :)

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  7. By Robert Rapier on February 18, 2010 at 10:43 pm

    Yeah, Maury, nobody here accuses ethanol supporters of being "lobbyists, and shills."

    If you are an anonymous poster whose talking points are comically biased and straight out of the lobbyist's handbook, you have to expect that people will suspect that. Do you think lobbyists are not out there posting on blogs anonymously, pretending to be just concerned citizens?

    RR

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  8. By PeteS on February 18, 2010 at 10:45 pm

    Rufus said: "A diesel-using "Hauler" is much more destructive to a highway than a gasoline, or ethanol using commuter. It seems reasonable that they would pay a higher tax."

    Uh, no, it doesn't. Or, at least, taxing by the btu would be a silly way to achieve it. You are just making an argument for taxing by axle weight.

    P.S. My American English is pretty good, but "hauler" was a new one on me. Had to check Merriam Webster. Over here they are "hauliers".

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  9. By rufus on February 18, 2010 at 10:49 pm

    Pete, here is my quote:

    Or, maybe we're just asking why we are still subsidizing Exxon, and the Saudis with hundreds of Billions of Dollars, and the lives of our kids when we can grow our own fuel for $1.70/gal.

    I think that makes it very clear I'm equating the war in Iraq with subsidies for Exxon, and the Saudis.

    Not about oil? Then what was the difference between North Korea, and Iraq?

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  10. By PeteS on February 18, 2010 at 11:05 pm

    Ok, Rufus, you DID say that. I didn't cite that part of your post as having been "debunked", but you're right, perhaps it should have been clear that you were equating them. My bad. I can only say I don't accept your equation. I'd love to offer my opinion about North Korea vs. Iraq, but this is the wrong forum. I'm here to read about energy issues…. which is why I DO read all your comments with interest.

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  11. By Robert Rapier on February 18, 2010 at 11:20 pm

    I think that makes it very clear I'm equating the war in Iraq with subsidies for Exxon, and the Saudis.

    I agree that the war was about oil, but I think where you and so many others have it wrong is that it wasn't about Exxon. It was about Joe Consumer, and the government wanting to make sure that the oil continued to flow unabated. There will be a conduit, but as we have seen in Iraq it won't necessarily be a U.S. oil company.

    RR

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  12. By PeteS on February 18, 2010 at 11:24 pm

    That's what I meant by "not directly about oil", RR. The European consumer benefits as much as the American one.

    The war "about oil" usually implies a big sucking noise as Iraq's oil drains into Dick Cheney's fuel tank. Or somesuch bunkum.

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  13. By rufus on February 18, 2010 at 11:36 pm

    Well, enough fun; back to the post.

    This will be a Battle Royale this fall. It's the anti-ethanol folks' last chance. With the weird "craziness" of 2008 in the rear-view mirror, and corn ethanol solidly profitable, coupled with the gains being made in Cellulosic Enzymes, if they can't kill this puppy now, it's over.

    The "Noise" will be Horrendous. The "Articles" will flow like wine. There will be a "Surprise" in the Journal "Nature," or "Science," or both. There will be Op Eds in the Wall Street Journal, and bits on Fox News Special Report.

    But, in the end, If Gasoline is $3.50/gal it all doesn't matter. There are many more Corn State Senators than there are Oil State Senators. It'll be on automatic pilot.

    If gasoline is $2.50 gal it will be different. Corn will have to give up some money. Maybe, a dime, or fifteen cents.

    It'll be "tough business" for those with weak nerves.

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  14. By PeteS on February 18, 2010 at 11:40 pm

    Rufus, you crack me up! Good night. :-)

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  15. By rufus on February 18, 2010 at 11:49 pm

    is that it wasn't about Exxon. It was about Joe Consumer, and the government wanting to make sure that the oil continued to flow unabated.

    I agree with that. The idea was to keep the oil flowing (at a price our people could afford.)

    It was deemed (correctly, I imagine,) that it would cost "Joe Consumer" less to send the Army in than to let a nuclear-armed Saddam Hussein gain control of the entire Persian Gulf.

    We didn't seem to have much of a choice.

    Now, it's looking like we might.

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  16. By rufus on February 18, 2010 at 11:52 pm

    G'nite, Pete.

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  17. By Wendell Mercantile on February 18, 2010 at 11:59 pm

    …and corn ethanol solidly profitable…

    Whoa there Rufus. Where would ethanol be w/o those subsidies, mandates, tax credits, and protective tariffs?

    Without that foundation of subsidies, mandates, tax credits, and tariffs, there wouldn't even be a corn industry, let alone a profitable one.

    I'd venture to guess almost any industry could be profitable if you get enough trade associations, lobbyists, and politicos on your side and they make laws in your favor.

    I could be profitable making prefabulated ammulite swirvel bearings if I could just get the politicians to pass a mandate saying people would have to buy them from me.

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  18. By Kit P on February 19, 2010 at 12:00 am

    Acceptance Criteria!

    That is a common term in the energy industry. If the object of a policy is to increase domestic production of renewable energy for transportation, the acceptance criteria should be that domestic production increased.

    It has!

    RR thinks that it would work better if we increased taxes on the poor.

    Recently, I have heard complaints by pro-nuke bloggers that Bush did not provide enough incentives to build nuke plants. The goal was to get 4 nukes built to find out what the cost of building new nukes. Well we have gone from zero nukes being planned to 30+ being planned.

    We have exceeded that acceptance criteria. The interesting thing is the the feds are making money had over fist. The NRC charges by the hour to review applications. DOE charges a fee for reviewing loan applications. Where I work we would be bragging about big profits.

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  19. By Maury on February 19, 2010 at 12:18 am

    "So, jackass, do you want to tell me once more why I should keep up with timber legislation in the U.S.?"

    Never mind that. Since you're already calling me a jerk and a jackass,I might as well get this off my chest. I think you hate ethanol so much,because cheap ethanol and cheap gasoline interfere with your business plan. You can't make fuel the way you want to at these prices. I don't know how much fuel you think could be made at $5.00 a gallon. Believe it or not,if I thought we could make enough fuel to end our oil addiction even at those prices,I'd probably support your anti-ethanol stance. But,I don't think your vision for the future is good for consumers,taxpayers,or energy security. It might be good for you,but not necessarily the rest of us.

    Despite the name calling and apparent glee over my occasional slip-ups,I still have some respect for you Robert. I never pretended to be of your intellectual caliber. Either this is a forum where people concerned about energy can speak their minds freely or it's not. If it is,we could all try to be a little more civil.

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  20. By Robert Rapier on February 19, 2010 at 1:36 am

    I think you hate ethanol so much,because cheap ethanol and cheap gasoline interfere with your business plan. You can't make fuel the way you want to at these prices.

    Well then you are truly an idiot. I am not anti-ethanol, and I have never been anti-ethanol. What I am is anti-pseudo-solution. Ethanol policy in this country today is a house of cards. But you and I will never see eye to eye, because for you this is religion. You have faith, and you latch onto any hint of good news and downplay any bad news. So, it's all good news. You have faith, even if it looks bad, it isn't really.

    I was in an ethanol plant two weeks ago, trying to assess whether a specific cellulosic technology could be retrofitted there. I look at cellulosic all the time – much more closely than you, Rufus, or probably anyone else here. I know the score on that count. I don't base my opinions on gushing press releases. I know the technical challenges. I know what the energy balances look like. I know what it means to take biomass, move it into a plant, convert it into ethanol, pellets, diesel – whatever – and then dispose of what's left.

    But you confuse that with an anti position. You are wrong. I would like cellulosic ethanol to work. But it was clear to me long ago that it wouldn't work on a large scale, which is why I am not focused on that. You do realize that, right? My "business plan" didn't dictate my position on cellulosic ethanol. It was vice-versa, but that is always subject to change. You see, I am not locked into anything. I keep my eyes open all the time for promising developments.

    So if that's what you truly believe, then seriously, you are an idiot. I don't know have any other interpretation.

    RR

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  21. By Robert Rapier on February 19, 2010 at 1:49 am

    If the object of a policy is to increase domestic production of renewable energy for transportation, the acceptance criteria should be that domestic production increased.

    It has!

    Well Kit, I am sorry but that is a terribly naive thing to say. I could increase domestic production of dung for home heating if I threw enough money at it. But that doesn't make it that basis of a sound energy policy. So I strongly disagree with you that the policy objective can be broken down so simply. There are many other factors to consider besides "did domestic production increase?"

    If it was as simple as that, let's just give everyone a million dollars if they agree to heat their homes with wood. It would certainly increase domestic production, so you would surely deem it a success – as it meets your acceptance criteria.

    RR thinks that it would work better if we increased taxes on the poor.

    Kit,where do you think the money comes from to fund the ethanol programs, the tooth fairy? If we raised fuel taxes instead, it would be a more efficient process – and would promote more innovation by not picking technology winners. It would also encourage conservation, which would be another thing that helped reduce our oil dependence. Finally, the cost of our ethanol policy would fall directly on the drivers proportionally to the amount they drive – rather than across the entire tax base. Apparently you think it is OK to raise taxes on a guy who doesn't own a car to pay for the ethanol in his neighbor's car.

    RR

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  22. By Robert Rapier on February 19, 2010 at 2:18 am

    OK Maury, that's enough. Sober up and then see if you might figure out that you grossly overdid it with that last bit of slander (which I deleted).

    To answer part of what was deleted, this is certainly an open forum where ideas are to be discussed. That's not what you have been doing for the last half dozen posts. You have been hurling false accusations at me, accused me of lying about my motives (your exact words, now deleted "lying through your teeth on your motives"), and then accused me of trying to censor your ideas. If you truly believe the things you just wrote – then don't ever post here again.

    If your "ideas" are to hurl accusations and make stupid comments about me trying to undermine ethanol because of my business interests – well don't let the door hit you on the way out, because those "ideas" are not welcome here.

    Just so you know, Rufus – whom I disagree with about 95% of the time – has never had a post censored here. So clearly it isn't people who disagree that I have an issue with. When you cross the line from disagreement to ad hominems – as you did several posts ago – and then fail to heed my warnings to stop, then you shouldn't be surprised when I start deleting your posts and call you a jerk.

    RR

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  23. By Paul on February 19, 2010 at 3:40 am

    RR, it looks like you touched more nerves than just Growth Energy here.

    It seems to me the biggest inequity here is that, as you mentioned, the non driver is subsidising the driver. If someone has managed to eliminate driving altogether Be it transit, bike, telecommuting or even a Tesla electric car) they have done their country a great service by reducing their direct oil consumption to zero – thus directly reducing oil imports by (about) the same amount.

    Same applies to someone who drives a diesel (or even biodiesel) vehicle, or CNG. Yet they, and every single income taxpayer in the country are then forced to subsidise the remaining gasoline vehicle drivers.

    The more that people get themselves off gasoline completely, reducing their oil import footprint to zero, the more they are subsidising those that remain on it. How can this possibly be promoted as a sound policy to reduce oil imports?

    Americans complained loudly last year about "socialised" health care, and here we have the some of those people supporting socialised gasoline usage. Perhaps you should label the ethanol credit as being the "public option".

    The people represented by Growth Energy obviously can't run a profitable business without "protetion" and "support" They are the business equivalent of the schoolyard blowhard who couldn't punch his way out of a wet paper bag..

    If they had any faith in their own (mandated to exist) business, they'd find a way to get off the subsidy. Tax the gasoline by the equivalent amount instead. This would encourage more E85, but more importantly, would encourage all drivers to reduce or eliminate their gasoline usage, which was the original (and noble) idea.

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  24. By Robert Rapier on February 19, 2010 at 4:09 am

    RR, it looks like you touched more nerves than just Growth Energy here.

    It sure looks like it.

    One thing I want to make clear here is that in no way did I get upset with Maury because of his views. I got upset with him because he questioned my basic honesty and integrity. We can debate opposing views here without any trouble, but if you want to start getting personal, then I have little patience for that.

    When Maury started falsely claiming that I am benefiting from some U.S. timber policy – and that is influencing my writing, he is making a false claim and accusing me of lacking integrity. I won't stand for that. If you want to do that, you won't do it here.

    RR

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  25. By rufus on February 19, 2010 at 5:26 am

    Does that mean you'll quit calling me an "ethanol lobbyist," Robert?

    Actually, Paul, the idea is to keep the country out of depression.

    At least a third of our population would be hit hard by a gasoline tax. This way we're taxing the incomes of the "better off" to encourage the growth of an alternative that should be good for the whole country.

    And, really, it's pretty small potatoes. Five Billion in a fourteen Trillion economy. And, that's not even taking into account all of the positive effects of replacing 9 Billion Gallons of Imported Gasoline.

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  26. By Robert Rapier on February 19, 2010 at 11:37 am

    Does that mean you'll quit calling me an "ethanol lobbyist," Robert?

    Rufus, you are an anonymous poster whose positions are absolutely indistinguishable from those of an ethanol lobbyist. The first thing I ever heard you say in the entire time you have been here – that didn't sound like an ethanol lobbyist – was to agree that the ethanol credit is now redundant.

    But whether you are or aren't an ethanol lobbyist, you have been respectful and haven't tried to smear me. As such, I let you state your opinion without any censorship. I will counter it where I think it is wrong. Where it is comically one-sided, I will point that out. But your positions are completely consistent with someone connected to the ethanol industry – except for word of someone whose identity is unknown. When I read your postings, I have to ask "Would an ethanol lobbyist say the same thing?" If the answer is "Yes" 98% of the time, then even if you aren't getting paid to do it, you are functioning as an ethanol lobbyist and not someone who is really seeking truth. As I said, though, that in itself is not grounds for having posts removed.

    I am a bit different than you or Maury. My identity is known. If Maury is out trying to smear me – as he was – then it has different implications than him getting his anonymous feelings hurt here. For that reason, I have a near zero tolerance policy on the way Maury handled himself here yesterday.

    RR

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  27. By Dave on February 19, 2010 at 11:39 am

    I'm thinking that most of the benefit of the blender's credit doesn't go to the ethanol producer or the oil company. Rather, it goes to the consumers (i.e., taxpayers) less administrative costs.

    The reason for this would be that ethanol is purchased on a spot market and blended. The market price for ethanol is high during shortage and low during a glut, and always unaffected by the credit. The blenders buy and blend to get the credit, but the blenders/oil companies have to price their oil competitively, which means that all (most) of the lower "cost" goes to the consumer.

    If a credit is in the works, it slightly lowers the price of blended gasoline that the consumer buys. If not, the consumer pays for the unsubsidized price.

    Does this make sense? To be clear, I'm not in the supply industry and am just trying to get a clear picture of who derives the benefit.

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  28. By Robert Rapier on February 19, 2010 at 12:00 pm

    Does this make sense? To be clear, I'm not in the supply industry and am just trying to get a clear picture of who derives the benefit.

    Dave, I think that is exactly right. I think what would happen if the subsidy was scrapped is that the price of gasoline would rise slightly, and therefore gasoline consumers would bear the burden of the RFS – which is as it should be.

    RR

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  29. By rufus on February 19, 2010 at 1:32 pm

    problem is, when you have a rack price $0.60 higher in one state (Alabama) than another (Iowa) the benefit is Not going to the consumer. It's, also, not going to the blender. It's going to whichever Major, or Super-Jobber that controls that market.

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  30. By rufus on February 19, 2010 at 1:33 pm

    Oh, Robert, you didn't mention the part where I think the credit should be extended for blends higher than E10.

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  31. By Robert Rapier on February 19, 2010 at 1:36 pm

    Oh, Robert, you didn't mention the part where I think the credit should be extended for blends higher than E10.

    Actually, I think that would be a reasonable compromise if it was only extended for E85. Of course E85 is not exactly selling like hotcakes now, with the subsidy in place.

    RR

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  32. By rufus on February 19, 2010 at 1:41 pm

    I know who you are; but I'm as ignorant of your funding as you are of mine.

    I still don't understand why it's a "smear" for Maury to point out something that you, yourself, have pointed out, but it's not a smear for you to make blind (and, false) accusations about me.

    I'm a "Fan" of the St Louis Cardinals, but I don't work for them. I think most people should have at least one serving of fruits, and vegetables, daily, but I'm not a fruit, or vegetable farmer. I don't understand why it should be assumed that just because I believe biofuels are a viable answer to problems we have coming down the road I have to be an Ethanol "Lobbyist."

    Or, for that matter, what would be wrong with it if I was.

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  33. By Robert Rapier on February 19, 2010 at 2:51 pm

    I know who you are; but I'm as ignorant of your funding as you are of mine.

    That's not entirely true. You are not completely ignorant of my "funding" which amounts to my job. It is true that you don't know if I am being secretly funded by other interests, but you would be hard-pressed to find a consistent pattern that is always favorable to one side. I have written favorable articles on ethanol, and I have written articles that the oil companies don't like.

    You, on the other hand, have only ever put out favorable ethanol stories – no matter how questionable the source – and you try to put the best possible spin on bad news. So your behavior is consistent with that of an ethanol lobbyist. Since you are anonymous, all I can go on is what the evidence implies.

    I still don't understand why it's a "smear" for Maury to point out something that you, yourself, have pointed out, but it's not a smear for you to make blind (and, false) accusations about me.

    Who are you? Who am I making blind accusations toward? Maury didn't "point out something." Maury tried to suggest that I have benefited from some law that changed regarding the timber industry. When I pointed out that this wasn't accurate, he continued to insist on it even when I warned him to stop, questioned my integrity, and then called me a liar.

    If your identity was known, and it could be verified that you are not directly connected to the ethanol industry – yet I continued to insist that you were – then I am slandering you. As such, all I can go by is the evidence in your postings.

    Or, for that matter, what would be wrong with it if I was.

    Well, as I said even if you are, I am not going to start censoring your posts unless you start throwing out false accusations and such. Even though I think you have made some pretty atrocious claims, you have generally kept it clean.

    So I have no problem discussing points with ethanol lobbyists, but it should be clear that an ethanol lobbyist isn't really interested in figuring out whether our ethanol policy is going in the right direction.

    RR

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  34. By Optimist on February 19, 2010 at 2:52 pm

    I think you hate ethanol so much,because cheap ethanol and cheap gasoline interfere with your business plan.
    Congrats, Maury, for exhausting RR's considerable patience. That is quite the accomplishment.

    If a guy criticizes ethanol (or mostly US ethanol policy) and backs up his statements with facts and analysis, how is that hate? Hate is emotional, and usually irrational. The linear opposite of RR, until he snapped under the duress of your emotional and irrational postings.

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  35. By Optimist on February 19, 2010 at 2:58 pm

    This will be a Battle Royale this fall. It's the anti-ethanol folks' last chance. With the weird "craziness" of 2008 in the rear-view mirror, and corn ethanol solidly profitable, coupled with the gains being made in Cellulosic Enzymes, if they can't kill this puppy now, it's over.

    The "Noise" will be Horrendous. The "Articles" will flow like wine. There will be a "Surprise" in the Journal "Nature," or "Science," or both. There will be Op Eds in the Wall Street Journal, and bits on Fox News Special Report.

    But, in the end, If Gasoline is $3.50/gal it all doesn't matter. There are many more Corn State Senators than there are Oil State Senators. It'll be on automatic pilot.

    If gasoline is $2.50 gal it will be different. Corn will have to give up some money. Maybe, a dime, or fifteen cents.
    Not sure I follow the music, Rufus.

    If ethanol is going to KILL in the marketplace, why is it relevant how many farm state senators there are? If ethanol is really that good, it is going to get there regardless of what the prostitutians (try to) do.

    I rather suspect the noise will be of the "why are we paying for this BS?" kind.

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  36. By Wendell Mercantile on February 19, 2010 at 4:16 pm

    …it should be clear that an ethanol lobbyist isn't really interested in figuring out whether our ethanol policy is going in the right direction.

    Take the example of General Wesley Clarke. West Point graduate, Rhodes Scholar, an intelligent and honorable man; yet he shills for ethanol as co-chair of Growth Energy, a major lobbyist for ethanol.

    I'm still trying to figure that one out.

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  37. By Russ Finley on February 21, 2010 at 8:31 pm

    Nice work, RR

    I've seen this many times …really back-fired this time. They were not counting on a withering response by you in the comment field, which is now on record in print for all to see and to refer back to.

    They won't make the same mistake again.

    Just beauty.

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