Consumer Energy Report is now Energy Trends Insider -- Read More »

By Robert Rapier on Dec 6, 2010 with 28 responses

How the RFA Wastes Your Tax Dollars – Part I: How Much is a Job Worth?

Over the next two posts, I will examine some of the tactics used by the Renewable Fuels Association to justify keeping the $6 billion ethanol subsidy that was made almost entirely redundant when the the Renewable Fuel Standard (RFS) was passed into law in  2005. Not satisfied with a market that is mandated by law to grow by 25% between now and 2015, the ethanol lobby insists that they need the subsidies as well. As I will show, they have no qualms about deceiving people to get their way.

In this post, I will cover a tactic that the RFA has previously condemned in others: Paying for self-serving research. I will also show that the amount of taxpayer money they want to spend to save jobs — even by their numbers — is more money than the jobs actually pay.

In Part II, I cover blatant dishonesty in a recent press release from the RFA, and I issue a debate challenge to the RFA in case they want to defend their arguments against rebuttals. I know they like the one-way street of sound bites and press releases, but I think we can learn a lot more about the truth by engaging in a back and forth dialogue.

Twitter Nonsense

I have to confess that I don’t visit my Twitter account as much as I should, but I recently dropped in and saw this little blurb (a “Tweet”, I believe they call it): “With nearly 10% unemployment, @RRapier wants another 100,000+ to be without a job. Who doesn’t get it?”

I thought “What is this nonsense all about?” The note came from a “Robert White”, and appeared to be in response to my post The Stroke of a Pen, in which I highlighted Bob Dinneen, of the ethanol lobby Renewable Fuels Association (RFA), suggesting that we needn’t debate the issue of the $6 billion ethanol subsidies, we just need to write the industry a check. I did a bit of checking, and it turns out that Mr. White is actually employed by the RFA as well. Given that he is paid to promote ethanol, that put the comments in context. But I still wondered about his comment about 100,000 jobs.

Following the Trail

So I started to dig, and found that the RFA is actually the source of the claim that a hundred thousand jobs could be lost if the Renewable Fuels Reinvestment Act (HR 4940) isn’t passed. This has of course been picked up and repeated as gospel by subsidy-friendly senators like Charles Grassley and Tom Harkin. It is amazing to follow the claims; they get more extraordinary with each repetition. Grassley: “Ethanol is good for rural economies, and a recent study found that the failure to extend the VEETC credit and the secondary tariff would result in the loss of more than 100,000 jobs nationwide and reduce ethanol production by nearly 40 percent.” I guess when pork for the constituents is at stake, truth is a casualty. But I am getting ahead of myself.

First, what is the Renewable Fuels Reinvestment Act (RFRA)? From the RFA site:

What RFRA Would Do?

Extend the Volumetric Ethanol Excise Tax Credit (VEETC) of $0.45 per gallon available to oil and gasoline refiners for each gallon of ethanol they blend through December 31, 2015. The VEETC is set to expire at the end of 2010.

Extend the corresponding secondary tariff on ethanol through December 31, 2015. The secondary tariff exists to offset the benefit of the VEETC which is available to all sources of ethanol, regardless of its country of origin. The tariff sunsets at the end of 2010.

Extend the Small Producers Tax Credit until January 1, 2016. This $0.10 per gallon tax credit is available on the first 15 million gallons of ethanol produced by ethanol companies producing no more than 60 million gallons per year. This tax credit expires at the end of 2010.

Extend the Cellulosic Ethanol Producer Tax Credit until January 1, 2016. Currently, cellulosic ethanol is eligible for both the $0.45 per gallon VEETC as well as an addition $0.56 per gallon production tax credit. This tax credit expires at the end of 2012.

Setting aside other ethanol subsidies like the Small Producers Tax Credit, we know an extension of the VEETC in its current form would cost $6 billion next year and rise every year along with ethanol production. But a news release from the RFA a couple of weeks ago warned of the dire consequences if both the VEETC and the tariff aren’t extended:

Ethanol, Ag Leaders Urge Extension of Key Tax Policies

“Without VEETC, ethanol blending will become less economically attractive to refiners, resulting in a substantial decline in discretionary blending, and upward pressure on consumer gasoline prices. As a consequence of reduced demand, ethanol plants will close. One analysis concluded that as many as 118,000 jobs could be lost if Congress fails to extend this important incentive.”

One analysis. Hmm. Now my curiosity — and suspicion — were really aroused.

One of the consultants that the ethanol lobby frequently uses is John Urbanchuk. I have discussed Urbanchuk’s work here before; he was the person who popularized the argument that in 2008, 214 million barrels of ethanol — with an energy content of 165 million barrels of oil — displaced 321 million barrels of oil. That argument was so flawed and goofy (e.g., it completely ignored jet fuel, diesel, etc. that comes from a barrel of oil) that even die-hard ethanol supporters who commented on my blog admitted as much. As I pointed out after taking a detailed look at the numbers in the aforementioned link, I couldn’t find any evidence of oil displacement in the actual data:

What to conclude from this exercise? The easiest conclusion is that the claims of petroleum import displacement have been at a minimum grossly exaggerated. It may even be that ethanol hasn’t backed any petroleum imports out, or that the impact is so small as to be unnoticeable.

If it Looks Like a Duck, and Quacks Like a Duck…

So when I saw the claim of 100,000 jobs lost, I thought “That sounds like Urbanchuk’s oil displacement argument all over again.” But the news stories I was coming across mentioned that the analysis came from a company called Entrix. Urbanchuk’s company was called LECG. Still, the claim was so Urbanchuk-like in its absurdity, I kept digging until I ran across this:

BFJ.com Podcast with John Urbanchuk, ENTRIX Technical Director, On the Impact of NOT Renewing Ethanol Blender’s Credit

Biofuels Journal spoke April 6 with John Urbanchuk, technical Director for ENTRIX, Inc., New Castle, DE.

Urbanchuk was hired by the Renewable Fuels Association to do a study on the impact of not renewing the ethanol blender’s credit, otherwise known as the Volumetric Ethanol Excise Tax Credit (VEETC).

Highlights From the Podcast

• The Blender’s credit has been in place since 1978 to help ethanol be competitive with petroleum based gasoline to level that playing field and still provides that today.

• The credit of 45 cents/gallon goes to the blender who adds ethanol to gasoline, not the producer of ethanol.

• Removing the blender’s credit will make ethanol uncompetitive with gasoline and hurting the profitability of ethanol production.

• Removing the credit could result in idled or bankrupt ethanol plants, loss of jobs and increased gasoline costs to the consumer. Could be loss of up to 37% of production.

• Removing the credit would result in higher imports of ethanol because Renewable Fuel Standard still requires ethanol be blended in increasingly higher amounts.

How funny is it that I could peg this as Urbanchuk’s work simply by the absurdity of the claims? So Urbanchuk’s scenario would have more than a quarter of the U.S. ethanol industry shutting down (which Senator Grassley exaggerated to nearly 40%) — despite the fact that capacity is closely in line with the mandated volumes and is set to grow under the Renewable Fuel Standard (RFS) from 12 billion gallons this year to 12.6 billion gallons in 2011 and ultimately to 15 billion gallons in 2015. The ethanol industry has a mandated and growing market, but that’s not enough. Addicted as they are to ethanol subsidies, the RFA needs to fear-monger by suggesting that over 100,000 jobs could be lost, just as Mr. White did in his Tweet — and just as Senator Grassley did in his speech. Incidentally, Urbanchuk’s study actually said 112,000 possible jobs, including all sorts of jobs in support functions (like the person who works at a cafe where the ethanol plant employees eat lunch).

So the analysis that the Renewable Fuels Association had been touting was one that they paid for themselves. I think we all know that you can hire someone to write a report concluding just about anything you want. Cigarette companies have funded research that concludes that cigarette smoking isn’t harmful. Thank You For Smoking comes to mind.

History tells us that research can be bought, and Urbanchuk has a history of delivering exactly what the ethanol lobby wants him to deliver. (Here is another damning indictment of his paper). Imagine the uproar from the ethanol lobby if the American Petroleum Institute trotted out a study that they had paid for that showed zero impact on the ethanol industry from removing the subsidies.

We don’t have to imagine; even today when a report comes out that is critical of ethanol, the ethanol lobby tries hard to link the funding to oil money (e.g., “That university got money from BP, thus all their research is bogus if it is negative toward ethanol.”) The implication is always that any links — even tenuous — taint the results in situations like this. (In fact, here is the good Mr. White doing just that; trying to cast doubt on a person’s arguments by questioning the funding). Yet the RFA is doing the same thing they criticize others over, citing the results of this research that they paid for as a credible source of information. Of course they always neglect to mention that they paid for it.

One interesting point on Urbanchuk’s report. Lately the ethanol lobby has started claiming that gas prices will rise if the credit isn’t renewed. Urbanchuk, whose job numbers they proudly tout, concluded the opposite:

Removing the 45 cents per gallon VEETC would reduce the price to producers by 27.4 percent. While this reduction would increase ethanol demand by nearly 12 percent, the lower price would induce producers to cut supply by nearly 38 percent. This reduction in supply would, in turn, raise ethanol prices 4.9 percent so that the net change in ethanol prices from removal of the tax credit would be 37 cents or 22.5 percent.

How Much is a Job Worth?

But let’s set that aside for a moment, and take the number at face value. If we spend $6 billion per year on extending the VEETC (again, ignoring other subsidies) to save 118,000 jobs (the most inflated number of jobs lost), how much are we paying per job? According to my trusty calculator, that is just over $50,000 per job. From Urbanchuk’s report, the average salary of those mythical jobs is $37,500. Of course we can take tax dollars and “create” jobs. But what I would think you want to do is create jobs that pay more than what you are spending to create them. Also important to keep in mind that it isn’t really 118,000 jobs. It might be a few thousand, but it might be none. After all, plants don’t close down after one bad quarter; the oil industry has lived with those boom and bust cycles forever. But even if it was 10,000 jobs, that amounts to $600,000 to save each job. That’s pretty inefficient job creation.

Incidentally, another recently released study — this one by a group called Advanced Economic Solutions (AES) — also concluded that jobs would be lost if the VEETC isn’t extended. Their analysis showed a loss of 296 jobs and a loss of 380 million gallons of ethanol capacity. The taxpayer cost under that scenario is just over $20 million per job saved and $15.45 per gallon of ethanol capacity saved. AES has consulted for food manufacturers — and they are unhappy with high corn prices — so it can be argued that their research is as slanted as Urbanchuk’s (and the RFA would certainly make that argument). But if I was a betting man I would bet that their numbers are much closer to the truth.

In the short term, domestic demand for ethanol may drop. Some marginal producers may have to accept lower margins, or even operate at a loss for a bit. Now there is a novel concept; instead of firing people, just weather the storm until the mandated volumes pick back up. But you won’t find the RFA talking about scenarios like that; they are in the fear-mongering business: If you don’t extend the subsidies, calamity awaits and the terrorists win. As some of my readers have asked, if the RFA is really so concerned about foreign oil, why they aren’t out lobbying the Des Moines city council to mandate that the city fire trucks, police cars, and city buses use only E85? Why are they boasting about their ethanol exports? I would think with all the concern over foreign oil, they wouldn’t export ethanol just on principle. If they lowered their prices they could sell E85 here at home and displace more of that foreign oil they are so concerned about.

One thing is certain. Job creation with the VEETC — even in John Urbanchuk’s nightmare scenario — comes at too high a price. It is common sense that we don’t spend $50,000 to save a job that pays $37,500. Maybe their hope is that people will be so frightened by the loss of over 100,000 jobs in this economic climate, that they won’t bother to question the cost per job. But hey, I own a calculator.

Part II will show how the RFA manipulates news in such a way that they convey false information.

  1. By Walt on December 6, 2010 at 8:45 pm

    This article is awesome.  This is what investigative journalism is all about folks.  How many would put their neck out there naming names?  I must admit I was getting a little frustrated with the articles…but this one was the rabbit trail I needed to say… Touché!

    [link]      
  2. By Walt on December 6, 2010 at 9:06 pm

    I was not going to post this…but I feel the pain is too much…plus I’m loosing my fear.
    http://www.allbusiness.com/ret…..936-1.html

    [link]      
  3. By Wendell Mercantile on December 6, 2010 at 10:19 pm

    “Without VEETC, ethanol blending will become less economically attractive to refiners…”

    That one statement from RFA says all one needs to know about corn ethanol: It can’t stand on its own and it’s nothing more than a way to transfer capital to the Corn Belt. Corn ethanol has always been about increasing the commodity market for corn. I’m glad to hear RFA finally admit that.

    [link]      
  4. By russ-finley on December 6, 2010 at 11:22 pm

    Yes, nice article. The RFA’s job is to promote their client’s interests. They are literally paid to do it. Like a lawyer, they don’t really have a choice in the matter if they want to keep getting a paycheck.

    The cost to all corn users of having  a 100 percent increase in the price of corn in the span of just five years is about $2 per bushel x 12.5 billion bushels = 25 billion additional dollars annually consumers of corn are paying thanks mostly to the mandate. Why do we never see that number kicked around? That seems like a fairly significant transfer of wealth by government fiat. Is it a hidden subsidy, so well hidden that nobody noticed it?

     

    [link]      
  5. By rrapier on December 7, 2010 at 12:58 am

    I’m glad to hear RFA finally admit that.

    I just think it is hilarious, that even using their numbers the cost to save a job is more than the job pays.

    RR

    [link]      
  6. By ronald-steenblik on December 7, 2010 at 2:44 am

    Robert, it is good of you to write about the absurdity of these employment claims, but some of us were onto this when it first came out. It is hardly a secret that the numbers came from John Urbanchuk. Indeed, the NRDC’s Nathanael Green took the RFA to task as soon as they started citing Urbanchuk’s study (back in April), attracting commentary from the good man himself:

    http://switchboard.nrdc.org/bl…..ost_e.html

    … as well as from yours truly, Russ Finley, and a devastating commentary from Thomas Elam (three who also regularly comment on the DTN Ethanol blog):

    This was followed up a couple of days later by a debate arranged by that ethanol cheerleader, Cindy Zimmerman:

    http://domesticfuel.com/2010/0…..s-numbers/

    I agree that it is strange that more people don’t point to the fact that most of the RFA’s numbers come from a hired gun. But that the RFA do that is no secret. All one has to do is click on the links on their website.

    [link]      
  7. By paul-n on December 7, 2010 at 3:08 am

    So the RFA pays a piper to play their tune and talk up jobs that aren’t even there.    Hardly surprising, since almost every other lobby group does that too.  What will be dissappointing is if any of the decision makers are fooled by it.

    Somewhere the penny has to drop that the country can’t subsidise itself to prosperity.  

    I would like to see the politicians make the ethanol lobby sweat a little by saying they can have either the RFS, or the VEETC, but not both – which would the lobby groups choose?  Which would the producers choose – a guaranteed market 90% of what they have today, or a 45c subsidy for a non guaranteed market for a fuel that most people don’t want to use?  I’ll bet that market would shrink a lot more than 10%.

    A bit like when the school principal, faced with budget cuts tells the staff they can take a 10% pay cut and all keep their jobs, , or keep their pay, and have a 10% staff reduction, meaning a 10% chance for each of them to lose their jobs.  In this economy, no one is entitled to it all, courtesy of the taxpayer – you have to justify your place, or share the pain.

     

    [link]      
  8. By the long shot on December 7, 2010 at 8:22 am

    You might also refer to Iowa State University study… Input-Outrageous: The Economic Impacts of Modern Biofuels Production by Dave Swenson Department of economics…

    Quote…

    As many of the questionable analyses on the ethanol industry economic impacts have
    originated in state universities or in state agencies (in Iowa) as have the more prudent
    ones, although the preponderance of really questionable impact assessments usually come
    from private consultants who simply misunderstand or mis-apply the basics of inputoutput
    modeling. Similar extraordinary local and statewide multiplier reports in recent
    years have been made relative to cattle and hog operations, meat packing operations,
    locally and investor owned wind-energy facilities, and tourism. If it is a hot issue, if
    there are strong advocacies, then the odds are that there will be a bloated impact summary
    floating around.
    If scarce public money is allocated on the basis of poorly articulated or wildly optimistic
    impact summaries, everyone loses except, of course, the industrial beneficiary of the bias.
    And we as analysts especially lose because our credibility is undermined.

    Contact me if you need some more research help. ;)

    [link]      
  9. By Ben on December 7, 2010 at 9:41 am

    excellent article as usual, its too bad you have a real job and aren’t just an energy blogger. might actually have a good chance of ending the VEETC this year

    [link]      
  10. By Ben on December 7, 2010 at 9:50 am

    Also note that Bruce Babcock, Iowa State Economist, completed a study this summer that concluded that the maximum job loss would be approx ~1,000 (and this was including the lapse of both the tariff and tax credit)

    [link]      
  11. By rrapier on December 7, 2010 at 12:21 pm

    Robert, it is good of you to write about the absurdity of these employment claims, but some of us were onto this when it first came out.

    I can’t believe I missed all of that. Took me a bit to realize why; that all played out during my trip to New Zealand and right after I returned. But NRDC did a great job, and the people who commented following the article really showed Mr. Urbanchuk’s “analysis” for what it is.

    RR

    [link]      
  12. By Benny BND Cole on December 7, 2010 at 2:51 pm

    The price mechanism is a wonderful thing. It tells us what is the most efficient way of doing something (if we can add in the cost of pollution through taxes). No need for complicated analyses, or EROEI studies.

    So the Big Q is, would people produce and consume ethanol (for transportation) if we had a roughly free market?

    I concede there are national security issues. If ethanol subs for imported oil, then yes, that is worth something.

    Still, even as we consume more and more ethanol, we have spent $3 trillion on Iraqistan–so, we ‘re subsidizing ethanol, and spending money like crazy on the Mideast anyway. Well, that is the federal approach to almost anything, actually–fund something from all directions to keep all lobbyists happy.

    Time for the ethanol crowd to stand on their own two feet, I’d say.

    [link]      
  13. By Rufus on December 7, 2010 at 4:02 pm

    I guess we’re going to get all incensed about the oil, and electric car subsidies, next, right? :)

    right?

    [link]      
  14. By Wendell Mercantile on December 7, 2010 at 4:45 pm

    Rufus~

    That’s correct. Government can’t give something to someone without first taking it from someone else. It’s especially irritating when those subsidies, tax credits, and special deals are a result of political maneuvering and lobbying by special interest groups (as with corn ethanol) and not based on merit or science.

    I’m not happy about the electric car tax credit either.

    [link]      
  15. By paul-n on December 7, 2010 at 6:01 pm

    And after the EV one then the solar ones, then the…

     

    Government can’t give something to someone without first taking it from someone else.

    Of course they can, they do it all the time, and we can even see how much they do it – the deficit.

    Instead of first taking it (taxing), they simply let people pay it off later, with interest, of course.  

     

    [link]      
  16. By Kit P on December 7, 2010 at 6:20 pm

    So then we have all the folks who do not want to get their hands dirty actually producing something complaining about wrecking the by sending money to (fill in racial slur), and (fill in ethnic slur), and (fill in religious slur).

     

    In case anyone forgot the purpose of corn ethanol is to produce transportations fuel.  The US is the world leader in making ethanol.  Of course the reason we make transportation fuel is because people demand it.  

     

    When you produce energy, there are always people who will explain why you should not or that you should another way.  The interesting thing is that they do not actual produce energy.  

     

    Since it is not practical to store significant amounts of electricity, it must be produced as it is demanded.  For example where my electricity is produced, peak demand (101,240 MWe) is about 10 nuke plants higher than it was just a few days ago and that the cost of buying electricity from a neighboring utility has doubled.   

     

    http://www.pjm.com/

     

    Of course the reason for increased demand is cold weather and it is going to get colder.

     

    I can also check to see how others are doing.  It looks like peak demand will be 90,000 MWe in the Midwest ISO.

     

    http://www.midwestiso.org/page…..Info+(EOR)

     

    I can even tell how they are doing in other countries.  Peak demand will be 85,000 MWe in France.  Move the cursor over the demand curve and you can see how each source changes.  Nuclear is at about 55 MWe.  We see that load following is done with hydro, nukes, coal and NG.  BTW, autres = other.

     

    When you are good at producing, you like to brag.  All the nuke plants I worked at are running great.

    http://nuclearstreet.com/default.aspx

     

    The plant that I worked at in California is not on the list.  When it is your job that goes away it is personal.  About 500 direct jobs paying high wages are gone from that area of California.  I sure that there are people who produce reports and essays can beat me in a debate about why that is good.  Of course if you need energy, they will write an essay explaining why you should conserve.  The purpose of nuclear power is to make electricity.  The US is the world leader in that too. 

    [link]      
  17. By rrapier on December 8, 2010 at 12:47 am

    Rufus said:

    I guess we’re going to get all incensed about the oil, and electric car subsidies, next, right? :)

    right?


     

    Absolutely. Start a thread. Tell us which subsidies you would like to discuss, and how we will rectify them.

    RR

    [link]      
  18. By rrapier on December 8, 2010 at 12:51 am

    Kit P said:

    So then we have all the folks who do not want to get their hands dirty actually producing something complaining about wrecking the by sending money to (fill in racial slur), and (fill in ethnic slur), and (fill in religious slur).


     

    I don’t even know what you are trying to say half the time.

    In case anyone forgot the purpose of corn ethanol is to produce
    transportations fuel.  The US is the world leader in making ethanol.  Of
    course the reason we make transportation fuel is because people demand
    it.  

    Bait and switch. Yes, we make transportation fuel because people demand it. We make ethanol because the government mandates it. Clearly people don’t demand it, or E85 would have a thriving market.

    When you produce energy, there are always people who will explain why
    you should not or that you should another way.  The interesting thing
    is that they do not actual produce energy.  

     Which people would those be? Do go on about these critics who do not “actual” produce energy.

    I have asked you this numerous times, but you always dodge the question. Do you think a subsidy on top of a mandate is a good use of taxpayer dollars. Why or why not?

    RR

    [link]      
  19. By anonymous on December 8, 2010 at 9:42 am

    I don’t even know what you are trying to say half the time.

    And we have to ignore the other 50%.

    [link]      
  20. By Benny BND Cole on December 8, 2010 at 1:36 pm

    OT, but worth watching.

    By Nadim Kawach

    06 December 2010
    Arab countries are set to embark on a drive to tap their massive unconventional gas resources following a sharp rise in production in the United States and development plans in other nations, according to an Arab study.

    Gas producers in the Arab world and other countries are already following with strong interest what is commonly described as the “revolution” represented by the breakthrough of unconventional gas, including shale gas, tight gas and coal-bed methane, the first of these forms being the most developed at present in the United States, the Paris-based Arab Oil and Gas magazine said.

    [link]      
  21. By Oxymaven on December 8, 2010 at 3:31 pm

    If our government can’t get this issue right, I don’t hold out much hope for their successful resolution of the rest of the fiscal mess we’re in. As the recent letter signed by 17 senators indicated: “Historically our government has helped a product compete in one of three ways: subsidize it, protect it from competition, or require its use. We understand that ethanol may be the only product receiving all three forms of support from the U.S. government at this time. “ If VEETC goes away, the impacts to the ethanol industry clearly will be minimal since there are still two other protectionist policies in place. It is scary to think that Congress wants to throw away another $5 billion or so on an issue that is so obviously inconsequential for the success of biofuels.

    [link]      
  22. By Wendell Mercantile on December 8, 2010 at 5:42 pm

    In case anyone forgot the purpose of corn ethanol is to produce transportations fuel.

    Kit P~

    That was not the original purpose of corn ethanol. The reason in being for corn ethanol was to increase the commodity market for corn.

    [link]      
  23. By Rufus on December 8, 2010 at 6:32 pm

    Ahh, I don’t care if they subsidize electric vehicles. Or deepwater oil. Or Windmills, and Solar (in fact, I’m in favor of wind, and solar subsidies – for a while longer, anyway.)

    Because, you see, the fact is: it’ll pay off in the end. We’ll spend a bit, and learn a lot. Oil, and coal, and nat gas will continue to get harder to extract, and more expensive. And, the money we’re talking about is, basically, chump-change.

    Take ethanol; it lowers the cost of gasoline about a nickel/gallon. And, the nickel? We borrow that from the Chinese (and Sauds, and Norwegians, and Japanese,) and we’re not ever going to pay it back (is this a Great Country, or what?) You see, the truth is we still owe money from the War of 1812. We don’t “pay off” bonds; we borrow more money, and roll the bonds over.

    Anyway, I digress. Being neither an ethanol, nor an oil lobbyist, I’m pretty agnostic at this point about the ethanol tax credits. I would like to see them wound down over a few years, but it will be neither the “greatest,” nor the “worst” thing imaginable if they’re not.

    Thing is, the “ethanol wars” are about over.

    [link]      
  24. By ronald-steenblik on December 9, 2010 at 8:00 am

    Rufus writes: “Thing is, the ‘ethanol wars’ are about over.” Really? I’d say they have only just begun. Here is the latest gauntlet thrown down by Marcos Jank, President and CEO of UNICA, the Brazilian sugarcane industry association:

    Unfortunately, lame duck legislation negotiated by the President and Congressional leaders is set to double the import tax on clean, affordable alternatives like sugarcane ethanol from nine to 18 cents and transform the tariff from an offset to a punitive trade barrier. 

    Consequently, UNICA will urge the Brazilian government to initiate dispute settlement proceedings at the World Trade Organization (WTO) as soon as this legislation passes Congress and is signed by President Obama. We will have exhausted all options to resolve our differences through informal dialogue and the U.S. legislative process. It will then be time for the WTO to resolve this matter in accordance with applicable international rights and obligations.

    Note that he refers to Congress looking set to “double the import tax” on ethanol. What he means is double the gap between the secondary import tariff ($0.54 per gallon), which the proposal would not change, and the VEETC, which the proposal would reduce from $0.45 to $0.36 per gallon. UNICA — incorrectly, in my view — calls this gap “the effective tariff”. Any trade economist would disagree: as long as domestic suppliers can supply the market at the market price plus the VEETC, then “the effective tariff” is the same as the actual tariff — i.e., $0.54 per gallon.

    Interesting times ahead.

     

    [link]      
  25. By Wendell Mercantile on December 9, 2010 at 10:13 am

    Thing is, the “ethanol wars” are about over.

    Not according the the Big Ethanol websites and the National Corn Growers Association. They still have their panties in a twist about the “food v. fuel” issue* and repeated studies showing ethanol — corn ethanol in particular — actually has an increased enviromental impact and causes more land to be put under the plow releasing more green house gases.

    __________________

    * An issue that will become more intense as fuel prices start to climb again.

     

    [link]      
  26. By rrapier on December 11, 2010 at 11:10 am

    Ronald Steenblik said:

    This was followed up a couple of days later by a debate arranged by that ethanol cheerleader, Cindy Zimmerman:

    http://domesticfuel.com/2010/0…..s-numbers/


     

    Ron, is that debate hosted somewhere? At the link, all you see is Cindy allowing Urbanchuk an unchallenged defense of his numbers.

    RR

    [link]      
  27. By ronald-steenblik on December 12, 2010 at 5:51 am

    @Robert:

    I assumed — wrongly, I guess — that the photos were of an actual debate, because they show both Greene and Urbanchuk at the same dias. But the links are only to the discussion on the NRDC blog. So maybe a live debate never happened.

    [link]      
  28. By Bobby Fontaine on December 23, 2010 at 9:03 am

    You might find this article interesting -

    Ethanol: First Big Challenge for the Tea Party
    http://www.americanchronicle.c…..iew/204172

    [link]      
Register or log in now to save your comments and get priority moderation!