Ethanol Subsidy Ends; Will it Raise or Lower Prices at the Pump?

This is a guest post by Mike "Mish" Shedlock, who is an investment advisor representative with Sitka Pacific Capital Management. Mish blogs at Mish's Global Economic Trend Analysis, where this post first appeared.

A major part of the United States' misguided policy on ethanol usage came to an end as the $6 billion-a-year ethanol subsidy dies

America's corn farmers have been benefiting from annual federal subsidies of around $6 billion in recent years, all in the name of ethanol used as an additive for the nation's vehicles.

That ends on Jan. 1, when the companies making ethanol will lose a tax credit of 46 cents per gallon, and even the ethanol industry is OK with it -- thanks in part to high oil prices that make ethanol competitive.

Subsidized since 1979 as a homegrown fuel cleaner than gasoline, corn ethanol had plenty of opponents, environmentalists among them.

Environmentalists question the cleaner energy premise -- adding factors like tractor diesel emissions and fertilizer runoff make it dirtier, they say.

"Corn ethanol is extremely dirty," Michal Rosenoer, biofuels manager for Friends of the Earth, said in heralding the tax credit's demise. "It leads to more climate pollution than conventional gasoline, and it causes deforestation as well as agricultural runoff that pollutes our water."

Opponents also see corn ethanol, which now takes a larger share of the U.S. corn crop than cattle, hogs and poultry, as a factor in driving food prices higher.

"The end of this giant subsidy for dirty corn ethanol is a win for taxpayers, the environment and people struggling to put food on their tables," Rosenoer added.

But there's a nearer-term battle brewing over corn-based ethanol. A 2005 law requires that 7.5 billion gallons of renewable fuel be produced by 2012 -- 6.25 billion gallons were produced in 2011. A 2007 revision gradually increases that to 36 billion gallons by 2022.

AAA Predicts 4 Cent Rise in Gasoline Prices

Please consider End of ethanol subsidy expected to bring higher gas prices

In January, the federal government is stopping a 45-cent-a-gallon subsidy to ethanol producers, who will pass that extra expense to drivers who buy ethanol-supplemented gas, said AAA Carolinas spokesman Tom Crosby. Extra costs at the pump will amount to about 4 cents, he said.

Not So Fast

The Brazilian Sugar Cane Association reports Congressional recess means the end of three decades of US tariffs on imported ethanol

For the first time in more than three decades of generous US government subsidies for the domestic ethanol industry, coupled with a steep tariff on imports, the United States market will be open to imported ethanol as of January 1st, 2012, without protectionist measures. Today’s adjournment of the 112th Congress means both the US$0,54 per gallon tax on imported ethanol and a corresponding tax credit of US$0,45 per gallon for blenders, the VEETC (Volumetric Ethanol Excise Tax Credit), will expire as expected on December 31st.

“With Congress in recess, there are no opportunities for further attempts to prolong the tax credit or the tariff, so we can confidently say these support mechanisms will be gone at the end of 2011,” said the Washington Representative for the Brazilian Sugarcane Industry Association (UNICA), Leticia Phillips. This means that in 2012, the world’s largest fuel consuming market will be open to imports of less costly and more efficient ethanol, including sugarcane ethanol produced in Brazil, recognized since 2010 by the US Environmental Protection Agency (EPA) as an advanced biofuel because of its verified reduction of up to 90% in greenhouse gas emissions compared to gasoline.

If attempts in Congress to prolong the tax credit had been successful, the subsidy package now about to expire would continue to cost American taxpayers about US$6 billion per year. As for the tariff, meant primarily to keep Brazilian sugarcane ethanol out of the US market, its demise should reinforce fact-based assessments about the various feedstocks used around the world to produce ethanol, according to UNICA President Marcos Jank.

45 Cent Subsidy Ends, So Does 54 Cent Tariff

With the tariff ending, price of imported ethanol should drop by 54 cents per gallon. The net effect of the end of expiring bill, all thing being equal (which they won't be), should be a 9 cent drop in price of ethanol.

Federal and State Ethanol and Biodiesel Requirements

Please consider Federal and State Ethanol and Biodiesel Requirements

Minnesota, a major producer of ethanol, has required all gasoline to contain at least 7.7 percent ethanol since 1997. Hawaii requires 85 percent of its gasoline to contain 10 percent ethanol, effective on April 2, 2006. The intention of the law is to spur local production of ethanol from sugar, but the ethanol could also come from the U.S. mainland or from Brazil.

Minnesota was also the first State to require biodiesel blending into diesel fuel, at 2 percent by volume. The requirement became effective in mid-2005, when two new biodiesel plants, each with 30 million gallons per year capacity, began operation in the State. The law was waived several times because of quality problems with the biodiesel, but it is again in effect.

Washington requires 2 percent ethanol in gasoline and 2 percent biodiesel in diesel fuel no later than November 30, 2008. The requirement will increase to 5 percent once the State can produce biodiesel equal to 3 percent of its diesel demand.

Louisiana enacted a requirement for 2 percent ethanol in gasoline and 2 percent biodiesel in diesel fuel, once sufficient capacity is built in-State. Assuming that Louisiana’s 2-percent and Washington’s 5-percent requirements are triggered, Louisiana, Minnesota, and Washington will require 102 million gallons of biodiesel in 2012 and 146 million gallons in 2030.

State Mandated Ethanol Usage

As noted above, some states mandate its usage, others don't. Mandating various blends adds to the price, due to inefficiencies. Moreover, given that ethanol from corn makes no environmental sense, promoting the idea is absurd.

The California Energy Commission Consumer Energy Center states

Most ethanol used for fuel is being blended into gasoline at concentrations of 5 to 10 percent. In California, ethanol has replaced methyl tertiary butyl ether (MTBE) as a gasoline component. More than 95 percent of the gasoline supplied in the state today contains 6 percent ethanol. There is a small but growing market for E85 fuel (85 percent ethanol and 15 percent gasoline) for use in flexible fuel vehicles (FFVs), several million of which have been produced by U.S. automakers. But E85 is primarily found in the Midwest in corn-producing states. Ethanol is also being used to formulate a blend with diesel fuel, known as "E-Diesel", and as a replacement for leaded aviation gasoline in small aircraft.

All gasoline vehicles in use in the U.S. today can accept gasoline blended with up to 10 percent ethanol (sometimes called gasohol). Flexible Fuel Vehicles (VVFs) are cars and trucks that can use any level of ethanol up to 85 percent. They're built with special fuel system components designed to be compatible with higher ethanol concentrations.

Calculating the Savings

For California then, assuming Brazil supplies the ethanol 9 cents cheaper, and the ethanol content of gasoline is 6%, California prices might drop about a half-cent per gallon. In states where the ethanol content is 10%, the price should drop nine-tenths of a cent per gallon.

However, this assumes Brazil supplies 100% of US ethanol and that is not a realistic assumption even if it makes good environmental and economic sense.

More than likely costs go up a couple pennies rather than the 4 cents calculated by the AAA. However, any price hikes on gasoline would be more than made up for by the drop in corn prices which in turn will pass through to grain-fed beef, corn flakes, etc.

Regardless of what happens to prices, ending all tariffs and letting the free market set prices is a very good thing in and of itself. Unfortunately, inane state rules and still intact federal rules mandating ever-increasing amounts of biofuels in gasoline formulations are still in control even though the subsidies ended.

A more detailed presentation of the way possible gasoline price changes -due to the subsidy being cancelled -are computed would be convenient.

A straight forward and "in your face , dummy" statement of what a subsidy really is should also be prominently featured.A subsidy on the face of it is simply a way of shifting the cost of a good or service to taxpayers who often use little or none of that same subsidy or service to the advantage of others-who may not even be taxpayers-who use a lot of the good or service.

Now of course Mish, and most of the audience here, understand this very well, but this forum is rife with comments made by people who consider the price of a Volt or a Leaf to be the subsidized price-as if government expenditures don't matter.

Such individuals never stop to think that if all taxpayers, rather than their own select group(ev buyers) were entitled to a deluxe "free lunch" such as the ev subsidy, for whatever reason-fixing their teeth, insulating their house, cushier old age bennies,whatever-the government really and truly would simply roll over and die due to budgetary problems.

There are possible win win deals-and I recognize that ev subsidies may prove to be a win for the general public as time passes, by helping get the ev industry up and running in the face of peak oil and air pollution.

But there is no such thing as a free lunch.Somebody ALWAYS pays for lunch.

The auto industry is big enough, rich enough, and powerful enough to look after itself.If part of it dies-well, death is the consequence of life, except if you are an invasive alien form of life known as a corporation, with potential immortality.It is utterly foolish to think that anything of any real consequence depended upon bailing out GM or Chrysler, except the careers of the politicians who voted for it.There was no shortage of cars, and the plants worth running could have continued running right through the bankruptcy process, and even the famous trademarks, such as the Chevy bowtie would have been preserved.

The best workers would have not missed more than a few weeks and been back on the job in new uniforms with a new corporate logo.The rest-well, it is a Darwinian world, and they had a long run earning far more than justified by the demands of the job.Most of us outside the comfy confines of government employment have never known real job security.I could have, by keeping on as a teacher, but chose not to.

Security for the rest of us was and is illusory, and depends mostly on the good fortunes of our employers.

Some sage remarked, paraphrased, before the time of Christ, that a democracy can exist only until the citizens discover that they can vote themselves freebies at the expense of the treasury, because it will afterwards collapse as the result of excess spending.

The long run consequences of the ethanol subsidy-which has NOT really and truly been abolished-are going to be to be a hydra headed nightmares of political, economic, and environmental consequences.

The simple fact that the use of ethanol is mandated is all the evidence needed for anyone with eyes to see with that the subsidy effectively still exists.The only real change is that instead of collecting it from taxpayers in general, it will be selectively collected from the buyers of gasoline in particular for the most part-the oil companies may wind up "eating" a small fraction of it, but if so it will be a VERY small fraction, as they are quite capable of passing along their costs.

The industry is now big enough that it has the political clout to potentially and /or actually does control the governments of the grain growing rural states, and the clout to be the swing player in some cases in Washington.

One thing that a lifetime of observation of politics has utterly convinced me of is that any government program , if it lasts long enough to "take root" in farmers parlance, is a far tougher entity than any other kind of organism-the people who work for it and the people who directly reap the benefits of it are able and hard core when it comes to looking after their meal ticket.

I fear that bio fuels industries may grow to the point before oil gets really short that the shills of the industry will be able to convince the public-which is notoriously short sighted- that biofuels mean the continuation of bau , and that the public will happily swallow the bait, hook, line and sinker.

The only reason I don't PREDICT this happening is that I expect a general economic crash before the biofuels industries have time to grow to that point.

If so, that will be the saw log that irrevocably breaks the camel's back of the environment, if something else doesn't finish off the environmental camel off first.

Our only hope for continued stability-and it is but a very slim hope-is that we get busy scaling down energy consumption for non essential or trivial purposes and scaling up efficiency and conservation

I agree with your post, esp. the end: the only thing more efficient at causing our extinction than continued industrial pollution from fossil fuels would be to turn the living matter of the biosphere into a general feedstock for liquid fuel production.

But there is no such thing as a free lunch.Somebody ALWAYS pays for lunch.

About this though I don't know if I agree, since somebody doesn't pay the sun to burn or plants to grow. If I find lunch in the woods (like i did last weekend), who paid for it? I'm not arguing that energy, or EV subsidies, are free, just that there isn't always a person behind every lunch. In fact, I'd say concerning the 'real' economy, it all comes from the biological process, and that human 'payment' (procurement/exploitation) can improve or damage lunch, or both at once. The idea that the economic transaction comes between the self and survival is pretty fundamental to our civilized existence, but it isn't absolute. It's tempting to think of everything in terms of the bubble of human economy and forget that larger scope of the real biological 'economy' that we are a small fraction of.

That's why I like a tough-rooted gov't system that's digs holes and fills them in better than I like a fragile corporate entity that's digs a huge hole and then disappears, leaving a massive hazardous pit.

Perhaps I should have pointed out that the term "free lunch", so far as I know, is customarily used only in discussions involving transactions between people or between people and businesses.

You have a good point in respect to what nature provides.In that case, I am in complete agreement with you.

well I can see you're thinking clearly on the subject. But it's pretty clear that the idea causes general confusion in general - in the vein of complaints against welfare and subsidies.

It's fair to say that there's some pretty heavy pressure leaning on the conversation from the corporate mouthpieces: that someone's hard work is at the other end of all consumption is an idea that is the backbone of our whole many-tentacled corporate state. The fact that it is a somewhat false assumption bears repeating.

It's like in politics today with this tendency to project wishfully towards a simple time when money was gold, and work was real work, and their weren't all these abstract, contrived systems of control and distribution. So when people complain about subsidies it's not from the perspective of practical outcomes, it's from a general disgust with 'someone getting something for nothing'. Only it's easy to forget that we're all 'something from nothing', and everything we've got is from something that's really not under our control except in the abstract system of our own device. We forget that fairness is just another abstract and relative construct of an elaborate system, not a fundamental right of any kind, in spite of our best efforts to bake some of it into our system.

In fact, maybe that is what frustrates us, and causes us to devise ever more elaborate controls over human economy - that we can't control the weather to treat us fairly. But fairness in the human economy is just as unpredictable and unaccountable.

If I find lunch in the woods (like i did last weekend), who paid for it?

The animal that didn't get to eat what you took.

(this question avoids who owns the land, pays the taxes, keeps up the land)

what if no-one ate what I took except fungi and bacterium? if I hadn't happened along, would I have been paying for their lunch?

The state owns the land. no-one keeps up the land - it's a forest. No human intervention is needed, and in fact, human intervention largely eliminates the kind lunch I found, not through competition but by incidental destruction of habitat.

From your perspective, an owner is Primary. nothing exists except that it is owned first by some person or, apparently, some animal. I'm not sure that I believe this is a sound way of thinking.


Mac, sometimes I don't agree with your bardahl, for instance. This nailed it down tight. The debt trends are frightening in their limits of the inevitable day of reckoning. I too hope for stability, but the safe bet is to live apart from the crowd and stay focused....and so on.

It's getting 'nuts' out there.

Anyway, well done and well said.


Paulo, Thanks,

I have a number of elderly relatives who are very dear to me who depend on the welfare state for basic living and medical expenses in the form of Social Security and Medicare.Hence although I am a conservative, I do recognize the enormous and emotionally overwhelming need for it.I recognize that it is going to destroy us,if something else doesn't get us first, but if I were in god like a position to simply pull the switch on it, I wouldn't be able to bring myself to do it.

And it's not just the welfare state that provides for individuals that's killing us-the state itself has been captured by special interests ranging from the lowliest peon on food stamps all the way up to Exon and Gold in Sacks.

Remember the the ancient citizen who when asked what held up the turtle that held up the world, he said any fool would know that it is turtles all the way down.Our government is now a defacto welfare state from the very top penthouse office on Wall Street all the way down to Skid Row.

This is why I remain a conservative at heart-seeing as the single most fundamental tenet of conservatism is enough government, and no more.

I can't remember a comment dealing with "bardahl" or any post here about "bardahl", whatever that might be.

Big government is not sufficient in and of itself to create banks and car companies too big to fail, but it is necessary precondition for the growth of such cancers in a democracy;with a truly conservative democratic government, we would not have any impossible budget problems confronting us.

As I can see, you're right, I'm right and that old Greek sage was right-the debt bomb is likely to take us all down.In the end, we would have been better off without the so called safety nets, because they only set the stage for an "all new,bigger and better" disaster later on.

The safety nets are like the Green Revolution-in which I was a lowly foot soldier, maybe a sort of junior grade officer, so to speak, since I majored in agriculture and taught the subject for a few years in a public high school.

The Green Revolution is not permanently sustainable-neither is a metastasizing welfare state with it's ever larger safety nets. Both are just more gasoline for the eventual overshoot fire that is going to reduce our numbers to a small fraction of what they are today.


This is completely unrealistic. A strong democracy uses antitrust to prevent the growth of banks and car companies too big to fail. The kind of conservative government that Ron Paul represents (for instance) would allow this kind of cancer unchecked. Our recent credit crunch was caused by too little regulation, not too much.

The single most fundamental tenet of conservatism is not small government. It's the Precautionary Principle: slow, careful change. It's especially opposed to utopian movements, that want revolutionary change.

Neoconservatives have a utopian vision, based on an unrealistic idea of what life would be like if large corporations were completely uncontrolled. This is not true conservatism.


Based in your post here, and your post further down-thread regarding private alcohol production, and your other posts from prior days, I wonder what you think of the idea of electing Ron Paul for President?

He seems to me to be the only candidate offering a truly different approach from the public-private corpocracy we have now.

Edit: And yea, I live in the U.S., and yea, I know about prohibition...

Hi , H

I apologize for my sarcastic tone in respect to your knowledge of American politics, but your question, as it was phrased really did lead me to believe you were from some other country.

To tell you the truth, I am not really that well acquainted with all of Paul's positions, since his chances of getting nominated are imo very close to zero.

But as a general thing, I like his philosophy far better than that of the republican establishment or the democratic establishment.

This is not to say that I approve of a policy of isolation and letting the rest of the world go it's merry way to hell without us being along for the joy ride.Paul , IF he were to be elected, would probably succeed to some extent in drawing in our military horns and setting a better economic agenda for the country.That would be good.

But the idea that the President of the US actually runs this country is a sad and pathetic joke;at best , he can influence events of great importance to move in one or another direction at a fork in the road, very often by defying his party establishment with support from the opposition,or by rallying enough support from his own party among those tired of the status quo and among those who trust him.

Nixon was able to open relations with China because of his stalwart opposition to communism.Bill Clinton was able to reform the American welfare system by triangulating with the republicans and the more pragmatic democrats.

Reagen was the lat president we had with real charisma, the power to inspire the people with confidence with in his "vision " for the country, but he didn't run the country either,except to set the tone.

I am a mule in that I am a sterile and lonely cross between what is thought of by most people as a republican or conservative, and what most people think of as a libertarian;and of course it has not failed to occur to me that the mule is a symbol of the other wing in our politics.

I am a libertarian in respect to sexual matters and drugs, which means in this respect I bray like a far left unwashed hippie of the Mcgovern /Vietnam era.

I trumpet like an elephant when it comes to corporate bailouts and corporate welfare and the need to ensure that people have a real incentive to work.

But I have not failed to notice that the republican establishment campaigns on free enterprise while passing out the goodies at an amazing pace to big biz with both hands -in plain sight, no less.It seems that "conservative" voters have truly remarkable eyesight but very little gumption;they can see the king's invisible clothing while at the same time failing to notice the hands passing out the goodies due to focusing on the movements of the mouth.

Ron Paul is not afraid to point out the hands and the goodies , which is good.

I am one with those who believe the dumbest single thing we ever did was to embrace globalization, and believed the same when it was just getting seriously underway.Now we have a hollowed out economy dependent on imports and credit , which will soon vanish, leaving us with few options to pay for imports, and a formerly self respecting and prosperous working class, which was if not the real backbone of the country, something very closely approaching it.Now these people by the tens of millions are seeing their hopes in life slipping away in the never ending flood of imports, and the people in the professions and finance are soon going to wish they had not embraced globalization, as the welfare bills come due in an unprecedented flood over the next few years.

It would in the end proven to be much cheaper and far safer to buy American made shoes than to support all the former shoemakers on food stamps.

People who work in convenience stores,and fast food restaurants generally don't make enough money to patronize their own employer's businesses.So what happens when every body who supposedly used to work in industry finally lands a peons wage service job ;there aren't enough rich people to keep a national economy consisting of trivial services industries running, and anyway the rich only patronize McDonalds if they get caught out in an extreme hurry on the way to the office or country club and buy a cup of coffee in order to use the restroom.

In the end, globalism means we figurativelyeat each other if we happen to be at or near the bottom of the rickety and rottren economic ladder.

There is going to be a political back lash the likes of which nobody alive in this country has ever seen here, and it isn't going to be pretty.It may arrive at almost anytime, but I don't actually expect it for a few more years.

Globalism means our only hope of fighting our next war(there WILL be one) with a major power, and winning it, means that we must maintain a standing super high tech military establishment hopefully capable of winning with relatively few men and machines.Why?

Because we no longer have the industrial base necessary to ramp up and fight a war the way we did in WWII.We are not in a position anymore to take advantage of Uncle Joe's remark to the effect that "quantity has a quality all its own". The Chinese aren't going to sell us tanks on credit to fight their own troops, or the troops of THEIR allies and flunkies.

Our politics are so tangled up that it is impossible to say either wing is mostly correct in its goals and philosophy according to my way of thinking.

Ron Paul is at least a man who, if he were to be elected,would let some daylight into the smoke filled backrooms of American politics and let some of the smoke out, so that the public would have a better idea of what the score really is.

But he is not going to be elected.There is a chance that he will succeed in founding a new kind of conservative movement in this country, and in that I hope he succeeds.The seeds are planted, and there are lots of tender young sprouts showing.Maybe they will survive and grow up into a third party or a long lived faction within the republican party.


No offense taken...I was just curious whether it was illegal to make one's own distilled spirits in quantities strictly for personal use, and not for sale to others, as one is permitted by low to brew small quantities of beer for one's own use.

I understand the tax man and industrial collusion/barriers to entry reasons behind the laws making it difficult to brew and sell to others, without jumping through the barriers-to-entry hoops.

As for you post here, I say to you: "Good show!"

You have provided an excellent piece of writing explaining your views on the subject...these views seem spot-on realistic to me.

I completely agree that if Ron Paul were somehow able to get elected, he would find it a steep uphill slog to implement much of any of his ideas without enough Congressional allies to form majorities in both Houses.

I also agree with you about globalization...I was once enamored with the idea of dropping trade barriers back in the Reagan era, because I thought that our initial sacrifices would allow a rising tide to life all boats (or at least many boats) around the World, and that once other 'prosperous' nations were created, we would benefit greatly from increased mutual trade. There would be a huge reduction in poverty, a huge planet-encompassing rise in living standards...spandex jackets for everyone!

Since then, I have changed my views on a host of issues: The definition of 'prosperity', the realization about Limits to Growth (sources and sinks), the truth that people in our own country need employment making things in our country; that we have been hoodwinked into believing that the FIRE economy was a good substitute for making things in this country...that we could proper by all being import managers, marketing gurus, and 'innovators'.

President Reagan was a nice man, and meant well, but in retrospect I think he and his allies puffed up the citizens of the U.S. with a lot of feel-good talk, and that we would have been better off listening to Jimmy Carter about energy issues and H. Ross Perot about the 'Giant Sucking Sound'....and we should have listened to all the 'eco-hippies' back in the '70s about the population bomb, instead of fighting to get rid of birth control and sex education and fighting a useless war to keep homosexuals in the closet etc. in the name of 'family values'. That stuff was all just bright shiny objects to keep the herd on the 'extend and pretend' track and served as smokescreen to obscure the Limits to Growth which we sped by in massive overshoot....

The last thing we need right now is another Pied Piper of BAU at the Bully Pulpit...we don't need magic oratory propping up another generation of extend and pretend.

I cannot exempt/exclude the MIC from the coming budget cuts/austerity measures.

From my experience, the waste I have seen is breathtaking. I will not elaborate...I cannot cut my own throat.

I have also outgrown my younger-daze fantasies of 'Team America' rolling into any country we wish, and also being poised to fight the ultimate fights, in order to impose a 'Pax Americana' on the World for everyone's greater good. I have spent my entire adult life on the inside, and my experiences and observation and knowledge informs me that this idea of America's military might pacifying the World, be it through old-school masses of troops, tanks, planes, ships, etc, or new Coke thinking of drones, space sensors, cyber-war, special ops, etc...all that is pap fed to the starving infants out in TV-land.

I sum, there are a lot of folks on this list who make great purchase about the U.S. deficit and the size and intrusiveness of government...but when presented with the one guy who wants to try to shrink all that, they recoil. Marry Paul's smaller government ideas with Cain's 9-9-9 taxes (or something like it)...I was also surprised at all the folks on TOD who advocate for an end to growth and stopping the tide to buy more and more stuff refusing to grok the idea of shifting the tax burden from income to essentially a national sales tax.

One last...although I can sign-off on ideas to eliminate regs on things like auto safety (let the buyers beware and let the market decide, but please don't moan when/if auto deaths rise), I cannot sign off on eliminating government regulation to limit pollution. We cannot go back to the daze when it was OK for folks to dump any stuff they felt like, in the interest of profit margins or laziness, into the nearby stream, river, ocean, or on the ground to seep into the water supplies and poison the a hugely greater rate than we already have been. That is /not/ going to float with me.

None of us have 'the answers' Ron P/ (Darwinian) says, there are likely not predicaments.

But we can have conversations and attempt to make things as least bad as possible.

Of course... that also depends on one's philosophy...many think that a rapid contraction would be the best thing...not necessarily a die-off, but a great contraction in economic activity, to reach a lower steady state...perhaps with much more 'by hand' crafts and labor...

...I recall a member named 'Aniya' who said that we needed to re-defining/re-examine the nature of 'work' and 'jobs' first I did not understand what she meant, but I am strating to understand now...

Anyhoo, good chatting with you...peace be with you (and all the TOD cats and dogs)!

It would in the end proven to be much cheaper and far safer to buy American made shoes than to support all the former shoemakers on food stamps.

This is unrealistic. Automation, not offshoring, is the primary reason that shoemakers are unemployed.

Even if we never, ever globalized, they'd still be out of work.

Most ethanol analysts that I have read believe that the expiration of the blending subsidy is a non-issue.

Brazil's ethanol imports from US notch record high in 2011

Brazil imported a record high 1.1 billion liters of ethanol from the US in 2011, compared with 74.084 million liters in 2010, according to official Brazilian government data released Wednesday.

As most here know, I have been a supporter of ethanol and the "ethanol subsidy". And in its pretty lonely taking that position on this site.

Although ethanol had to take the heat for it, the subsidy was collected by oil companies mostly and while benefiting corn farmers and ethanol producers they did not receive it directly as this statement implies:

That ends on Jan. 1, when the companies making ethanol will lose a tax credit of 46 cents per gallon, and even the ethanol industry is OK with it -- thanks in part to high oil prices that make ethanol competitive.

That statement is simply false. The blenders credit went mostly to oil companies. That is why farmers and ethanol plants will survive without it.

It has been useful in getting ethanol established in the face of the oil distribution monopoly. Without the subsidy oil companies had no financial incentive to blend it into gasoline. It was a real politic solution for any liquid fuel that wants to compete with gasoline. Ethanol is too small to have its own distribution system and it makes no economic sense to even try.

But now ethanol is a force to be reconded with. Should it disappear as most here hope the implications would be profound. It would likely mean a reversal in the recent downtrend in gasoline consumption and oil imports into the U.S.. It would mean the loss of thousands of jobs that can not be outsourced. It would mean the reintroduction of MTBE, a known carcinogen. It would mean more wars for oil.

The "blenders credit" was fair because it partially compensated the oil oligopoly for the inevitable loss of market share, use of its distribution system and marketing facilities. But now ethanol in the U.S. is nearly as well established as it is in Brazil.

Despite all the hollering and screaming from opponents there is no going back because there is no back to go to. The ethanol clock does not run in reverse.

Please note the oil industry still receives mega subsidies, both in the U.S. and around the world. It is odd that few complain. In fact Nigeria is in turmoil because oil subsidies were removed.

It is a strange world. Oil subsidies which run to the trillions if wars for oil security are included are loved, but "ethanol subsidies" which were in reality mostly received by oil companies are hated.

Go figure.

But now ethanol is a force to be reconded with. Should it disappear as most here hope the implications would be profound. It would likely mean a reversal in the recent downtrend in gasoline consumption and oil imports into the U.S.. It would mean the loss of thousands of jobs that can not be outsourced. It would mean the reintroduction of MTBE, a known carcinogen. It would mean more wars for oil.

That is a pretty good point really.

Anyway realistically there isn't one good position for anything if you approach an issue with an open mind. You could argue just as vehemently either way that corn ethanol is good or bad and be right either way and it really depends on what you personally consider to be important. In the end I guess the thing which wins out is that yours and your own is always more important to you than someone else especially if they live in another country. I don't think anyone here would tell the doctors to take their kin out of ICU because those resources could have saved hundreds of people if distributed to a poorer nation for more easily treatable ailments.

Even if corn ethanol increases food prices and puts it out of reach of poorer people most people typically value those close to them more than people they will never meet. I don't see any reason to just latch onto corn ethanol as bad when there are any number of purely selfish acts that people would do at the expense of others. I believe the best position may be best described as:

As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other eases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good

But it has to be rational self interest and not wasteful indulgence.

I'm afraid I am one of the ones who has made this an unfriendly place for you, x.

But keep in mind that I have lit into just about everyone at one point or another on this site.

Since I have not been keeping myself fully informed on the recent twists and turns in the ethanol issue, I wonder if you could help me with one point--most enviro's I know who have supported corn ethanol did so with the hope that it would be a transitional fuel on the way to ethanol from switch grasss or from some blend of native grasses and forbs.

Do you have any idea if there has been any move to such a transition?

I do think that ethanol has been a boon for many farmers and workers in many small towns, and those folk need all the help they can get. I hope we can find ways to help farmers make money doing things that are not quite so damaging to water tables, the land, the air, the rivers, lakes and streams...


"It would mean the reintroduction of MTBE, a known carcinogen".

In two words "total rubbish", I am afraid. I wish that those who promote every synthetic product as carcinogneic would do their homework.

There are plenty of sources but as you are american try this one as it should more than put you straight on your allegations of MTBE adverse effects.

MTBE was banned because in the USA (not Europe) the Californian distribution system is so decrepit that gasoline leaked into the groundwater. MTBE has a very low threshold of detection and can be detected by humans down to 5 ppb.

Is MTBE better than ethanol? In my opinion yes.

The octane blend values are about the same.
MTBE effect on RVP is less.
No front end volatility issues.
Higher CV
No water separation issues
No corrosion issues
No seal issues
No distribution issues
Lower cost!!!! in gasoline

If one considers what adverse impact ethanol has on the gasoline price with respect to the additional distribution and blending costs, and the fact that it displaces other products from the gasoline pool, that have to be disposed of, then ethanol is nothing but cost to the consumer. Take out ethanol and the price of gasline will drop.

I do not like subsidies of any kind. Any fuel, or alternative fuel, has to stand alone and be competitive or die. The ethanol lobby, has so far managed to cultivate ethanol as a long term solution to future fuel supplies, with some very dubious claims and even more dubious economics. The real impact on the environment has never been properly quantified; the impact on soil structure and fertility from intensive monocultures or the production of peroxyacetal nitrates which are potent respiratory irritants and can damage vegetation, as well as boosting low level ozone.

Many of us at TOD believe in and abide by good science. It is a shame that the ethanol lobby does not adopt such principles. Maybe that is because it is driven by large corporations with vested interests (not unlike big oil).

As for there is not way back - do not bet on it.

If you really want to use ethanol as a fuel then design the engine to run on ethanol, not what we currently have which is adapted engines. That means boosting the CR to diesel like ratios and port injection. That way you will at least be able to achieve a thermodynamic efficiciency close to diesel rates and avoid most of the issues associated with gasoline-ethanol blends.

I do not like subsidies of any kind. Any fuel, or alternative fuel, has to stand alone and be competitive or die.

In an ideal world one could get closer to that ideal. OTOH, in a world where fuel should have a $3/gallon tax to internalize hidden costs, but do not.....subsidies of alternatives are better than nothing.

I would love to see a $3 gallon duty/tax on US fuels and bring them in line with much of the OECD. That way it will put an end for good to the ghastly SUV crowd.

The revenue generated could better put to use developing low carbon means of travel and power generation, and NOT subsidising biofuels to encourage consumption.

We all, and I mean all have to learn to live with less energy and the easiest way forward is better fuel efficiency.

That is why I drive a Prius. Boring but the best available at present.

Well, if we had a good carbon/fuel tax, we certainly wouldn't need to subsidize alternatives. Subsidies are just a 2nd best way to encourage alternatives.

I agree about SUVs - how did military vehicles get on the road?

We certainly need to use emit less CO2. OTOH, electric cars that charge at night encourage wind generation - I don't see any problem with that.

I like the Prius - it's a great start. The plug-in Prius (.013 gallon per miles, Volt (.005 gal/mile), and Leaf (zero g/m) will get us much closer to where we need to be.

EVs are usually fun to drive! The Volt, Tesla and Fisker are examples of EVs with power and great handling.

Couldn't agree with oldfarmermac more. Susidies, tax breaks, etc are simply welfare. We call them fancy names so the classes above the poor won't be offended. Much, much nicer to say farm program than it is to call it a welfare program to support farmers and, usually, it's the wealthy farmers at that. In my opinion, virtually, every American stands at the government trough in one way or another. We ALL get our "benefits". And the higher up the food chain you go, the better the "benefits" or as I call it welfare.

You guys aren't thinking geopolitically. You can't necessarily risk a pure market based system for basic commodities like food and energy. If we let markets rule completely, Americans would probably get most of their food from overseas sources. How incredibly dangerous would that be? It's much better to subsidize farmers and make sure that we are completely self reliant for such a fundamental need. Similarly, our geopolitical strategy for energy--since oil is a non-renewable resource and we passed the peak of our own oil reserves long ago--is to use as much of the rest of the world's oil as possible. If we don't use it, some foreign enemy power would have been using it and replaced America as a superpower by now.

Americans would probably get most of their food from overseas sources.

I doubt that very much. The USA has a huge comparative advantage in producing food, so much so that it can convert a third of its corn crop to ethanol and still be the largest exporter. There would be winners and losers in eliminating subsidies, but as X points out, they're not who you might think they would be.

How incredibly dangerous would that be?

I don't know... how about asking the Japanese, who have been doing just that for a generation or so? But it's hypothetical, sadly. Allowing poor countries like Kenya and Mali to earn money by exporting food would help them, and decrease prices for American consumers.

our geopolitical strategy

One problem with American armchair geopolitical strategists is that they are all to a woman zero-sum thinkers. If they thought in terms of win-win, life would be easier for everyone.

Another problem is that they are trying to win the 20th century. By the end of the 21st, oil will be of negligible importance, one way or another.

Edit: added "armchair".

I believe that much of the imported ethanol that was being exported to the US does not face the tariff because of a loophole in the tariff law. Up to 7% percentage of total ethanol demand, imported ethanol does not face the tariff provided that the imported ethanol is concentrated on one of the Caribbean islands (called the Caribbean Basin Initiative, I believe). The way that this works is that ethanol with some remaining water in the ethanol is shipped to a Caribbean nation where the final distillation takes place to remove the remainder of the water. Provided that that the finishing process takes place in this manner, the imported ethanol does not face the $0.54/gal tariff.

Here is a link to an article which discusses this concept.

Me4ntion of this loophole reminds me of a question I have been meaning to ask.

Doers anybody here with detailed knowledge of the domestic moonshine business know about any stills being constructed to run on the low grade heat currently being wasted by other industries?

Building an ethanol plant in a place where such otherwise wasted heat is available for little or no extra expenditure for fuel would go a long way toward improving the poor EROEI of ethanol.

Homeboys around here mostly do their 'stillin right in their kitchens these days with pressure cookers modified for the job.The mash is worked up in a couple of plastic trash cans in a closet.There is a lot less risk of getting caught this way than there is running around at night in the woods and up and down the highway, and the heat given off by the stove is welcome in cold weather-so is the pint or two of high proof refreshments.

Mash, which is simply a form of raw wine, is basically legal, so long as you don't get caught with it while in possession of the still, or finished product, at the same time.

Parched hill billies in a big hurry for a drink have long been in the habit of drinking some while waiting for the real stuff to trickle out of the worm.

A properly constructed mini still is very easily disassembled, and it is hard to prove it ever existed simply because the parts that could be used to build it exist.

If you drink it about as fast as you make it, you will never be at risk of getting caught with a large quantity.

Chickens, pigs, and cows love the leftovers, and hungry dogs will eat the stuff too if you mix in a few table scraps with it.If it were kept properly clean at all times in preparing it, there is no reason you couldn't season it and eat it yourself, although I personally don't think I would enjoy it without adding a truly excessive amount of butter and sugar.

Some people who take pride in the flavor of their stuff have been known to sell a few pints at ten dollars each,or more, if it is made from fruit rather than grain.

I'm taking the fifth, pardon the pun, in respect to any questions respecting my knowledge of the art of making craft whiskies and brandies in the family kitchen. ;-)

I'm still looking for a chainsaw that will run on an ethanol/oil mix. We compost enough garden produce (spoiled, buggy, etc.) to make enough ethanol for a year's worth of wood cutting. While it's a lot of work to get up to 190+ proof that would be required, having the ability to fuel small engines may prove useful in the future.

I once put straight grain alcohol from the liquor store in an old Briggs and Stratton flat head tiller engine with a float type carburetor just to see if it would run on it.

I had to give it a whiff of starter fluid-ether- to get it started, but it ran so long as I kept it revved up a bit with the choke partially closed.Then I used a drill to enlarge the metering jet fuel(which ruined a two dollar part, parts were cheap back then) passage and it ran without choking it.This whole experiment consumed about an hour and a good portion of a fifth.

But I didn't actually try to do any digging with it, so I can't say whether the engine could have handled a normal load or not.

I would readily bet that the rubber( plastic?)diaphragms in chainsaw carburetors would melt into goo within fifteen minutes of being dunked into pure ethanol; and the carburetors themselves are so small and compactly made that modifying one very much would be beyond the reach of anybody not in possession of a combination of machinists and jewelers skills and the tools of both trades.

Ordinary gasohol will corrode older carburetors carburetor pretty fast.We old farmer types have learned to run the carburetors on our old equipment dry when such equipment is not in use to preserve the carburetors.This corrosion doesn't matter so much in an old car or truck with only a few years of life left in it, but an orchard sprayer or irrigation pump for example may be used only a few days a year and thus expected to last for a couple more decades even if it is already pretty old.

I suppose it would be a good idea to research methods of concentrating ethanol past about 140 proof, which can be accomplished easily by double distillation-running the finished product thru the still a second time.

A couple of gallons of chainsaw fuel , in a supply pinch, would be worth-well, you could name your own price-I could easily cut up as much wood with a gallon in one day as I could with a handsaw in a week or two.

Rocky Mountain Guy cautioned against using old, stale motor fuel a few days back-he is correct, if we make the assumption that fresh fuel is available.But old, stale fuel is a lot better than no fuel at all.

The Ethanol page on Wikipedia and the purification page linked off it are a good start. You can distil up to around 190% proof. I have a nagging recollection about pure Ethanol breaking down in the absence of water but I may be wrong.


I have a nagging recollection about pure Ethanol breaking down in the absence of water

What you may be remembering is the higher the proof the more it will attack its container. In theory, when stored in glass, alcohol will last as long as container is intact.

Note in the booze store - plastic on 40% (80 proof) and lower. Higher proof is in glass. Why? The higher proof dissolves the plastic. (Another plastic/booze interaction. Take a red wine place in glass and a cheap plastic cup. Swish about over 10 min time. Taste)

Note now that the brand Everclear has a 151 proof product that looks like the older 190 proof.

I'm not at all sure, its something I remember back from my chemistry days and, no, I am not going to say when :)


I have a nagging recollection about pure Ethanol breaking down in the absence of water but I may be wrong.

The notion that ethanol is unstable absent water is erroneous.
Pure ethanol is available from most any chemical supply house.

(1 liter of the #459836 Ethanol 200 proof, anhydrous, ≥99.5% from Sigma-Aldrich
is $87.70 - though that includes the $27.00/gallon ($7.13/liter) tax.)
Yes, it comes with a tax stamp on the bottle.

It is fairly hygroscopic (absorbs water out of the air),
so when I have bought it in the past, I would put it into the glove box with
an inert (nitrogen or argon) atmosphere before opening it.

It is hard to make it anhydrous (water free), even the "synthetic" ethanol (made by hydration of ethene (ethylene) gas) will have water from the process in it.

Ah, thanks for that detailed response, as I said, it was a while ago. Like the glove box bit.


No idea - I'm ignorant of the basic burn data, and vulnerability of diaphragms, but has anybody tried mixing ethanol with (a little?) good vegetable oil?
I guess that chainsaws are much too choosy.

Vegetable oil will never do as a crankcase and piston and cylinder lubricant-it is severely lacking in the necessary qualities expected of a lubricant used under such conditions.

Now this is not to say that engines have not been run or will not run with vegetable oil in the crankcases under emergency conditions for short periods of time.There are recorded instances in plenty of this being done, especially under war time conditions with engines of ancient vintage-which were not nearly so finicky as modern engines.

Most people find it hard to believe, but there are numerous instances of engines running for short periods of time with only the residue of oil left behind when it is drained in preparation for an oil change and somebody forgot to refill the crankcase and drove off.

This very thing happened to my maternal grandfather when he took his nearly new 66 Ford pickup back to the dealer for routine service.

When he got home, the phone was ringing off the hook, with the service manager being kind of frantic of course about the possibility of having to explain to management about having to install a new engine for free.

He drove out personally, filled it up with oil, and test drove it, and promised if it ever gave trouble to overhaul it gratis.

One of my cousins is still driving it occasionally when he needs to run to the dump or to the building supply, and it yet has to be overhauled.It burns too much gas to use it very much these days, which mostly explains why it is still running..

Folks who knew how used to modify chainsaw engines to run on alcohol and put them on hopped up custom made go carts back in the sixties.I'm not up on the details but I'm pretty sure the carburetors were specialty items purchased from aftermarket performance companies.

I'm fairly sure there is no fundamental reason a chainsaw couldn't be built to run on moon shine, but I doubt it would be possible to easily modify one with that in mind, since it must run in all positions and therefore needs the specially designed carburetors made to accommodate that need.I seriously doubt if anybody manufactures an all position ethanol compatible carburetor.

Ethanol and methanol are less energy dense than gasoline, but a racing engine especially tuned to run on either will produce far more power than it will on even the very best gasoline.Of course such an engine also burns a far larger volume of fuel, but if you are in a really BIG hurry to go just a quarter of a mile, or even five hundred miles around and around, in front of a large paying crowd, that is not a serious handicap.

There used to be special classes for drag racers who used such engines, and their cars were much faster than similar gasoline powered cars.I haven't been to the drag races since the nineties, so this may not be true these days.

I have seen a specially constructed drag racer go almost three hundred mph from a dead stop in only 1320 feet which used a specially modified engine originally designed to go in an ordinary Chrysler car.It could put out well over two thousand horsepower for six or seven seconds before it became necessary to shut it down to prevent overheating it.

I believe Stihl made or makes an ethanol chainsaw for the Brazilian market (but couldn't find it on their site). I think a Russian company still makes diesel chainsaws. Several folks make hydraulic and pneumatic chainsaws (which are actually higher power to weight but have a hose). My company uses these from bucket trucks.

I've been using jojoba oil for most of my lubricating needs lately. I don't know about it's temperature stability, but it's more of a liquid wax than an oil. I heard it was a replacement for whale oil, so I tried it, and it's now my favorite light machine oil. Easy to find in the health food store (apparently popular with the metro crowd for shaving). About $3USD/oz around here, but I'm close to the source.

The references to that article may contain it's temperature stability numbers. It sure works good on bike chains and such in any event...


While it's a lot of work to get up to 190+ proof that would be required,

Not that I have done this myself, but there are some still designs that give almost 190 proof out of the tap. These are not the pot stills for moonshine making, but are of the "reflux" type, and mirror the process used in the big distilleries. It is a very ingenious arrangment.

The best known one is the "Charles 803" still, invented by the late Robert Warren.

The model pictured produces about 4-5gal/hr of 160-180 proof. There is a larger version;

This is an alcohol fuel still, not a whisky still. It is designed for making 20 litres/hour of fuel grade alcohol. While it could be used to make whisky, it is larger and more expensive (it costs about $600 to build). It takes a couple weekends to make it properly. People interested in energy self-sufficiency will find making alcohol a fun and a worthwhile thing to learn. You can turn thrown-away food into fuel.

You can buy the plans for $30 from his widow (in Vancouver BC) who keeps the website going;

You need a separate "boiler" which can be as simple as a fire under an oil drum!
Given your skills in setting up your wood stove water heating system, I'd say you (or OFM) could build this system very easily.

A supporting website here;

These guys in Colorado make and sell kits for the two stills (5gph and 20gph);

Another place where you can find LOTS of information, and ready to go still kits, is from New Zealand. Producing your won spirits is legal there, and there are many places that make and sell the equipment. Just google home distilling New Zealand and see what you get.
Tis units looks pretty good, 25L drum capacity, $675;

But the good news is that if you want to supply your own drum, they'll sell you just the still part - on top for all of $190(NZ)

The hardest part would be doing the actual mashing/fermenting, especially from an impure source like food waste. Maybe OFM could help you with that, since he seems to know "someone" that has done a lot of home distilling...

I do not condone breaking the law but those of you who wish to experiment with ethanol production might be interested in these two guides. They were available many years ago to expats living in Saudi Arabia, one of the "driest" places on earth.

The Aramco Blue Flame and White Lightning can be downloaded from here.

Pressure cookers and a few cheap plumbing fittings work quite well. Swimming pool hypochlorite drums (25 L) normally have a vent valve. It is particularly effective in venting the carbon dioxide during the fermentation process.

The very first distillate should be discarded. It is quite pungent and contains acetaldhyde and will give the worst hangover you have ever had. Likewise be careful at the end. Ideally re-run the spirit a second time and I guarantee it will blow your socks off.

The yeast can be cultivated in a small bottle ( leave it open to air). Add a pinch of diammonium phosphate to feed it.

You may be farther ahead to look at an electric chainsaw and power the electric via biodiseal or ethanol.

4 stroke engines should work on alcohol.

The issue with using alcohol in a small engine are:

1) The alcohol may dissolve the plastic seals and fuel lines in the fuel system if they are not rated for alcohol, and,

2) The carburetor (They don't usually have fuel injection, and if they do, it's not programmable) is calibrated for gasoline, not alcohol. You have to re-jet the carburetor for alcohol.

Usually the carburetor jets are not replaceable, so you have to drill them out (with a great deal of precision), otherwise the calibration will be off and the engine will not run well (or may burn up, depending). If you re-jet it for alcohol, it will not run well on gasoline unless you re-re-jet it.

I have a question so simple I am embarrassed asking it...

Why is making your own ethanol illegal, even for one's exclusive personal use?

It is OK to home-brew beer, and to home-make wine, correct?

I suppose you must not live in the US, since you are obviously highly intelligent but also obviously woefully ill informed in respect to American politics and history.

Let's take the second question first-you can generally legally make small quantities of beer and wine for personal and family use but you can't sell what you make legally without jumping through a lot of troublesome legal hoops.There are people still living who can remember when the simple possession of a beer was a serious criminal offense in this entire country.

But after a few years we figured out that there aren't enough teetotalers to pay for enough cops and jails to lock up all the drunks, and therefore that Prohibition wasn't working at all.

Once Prohibition was repealed, the business interests who got licenses to operate did everything possible to maintain a production cartel;in this matter they were ably assisted by their worst enemies, the religious folks opposed to demon rum, who were responsible for Prohibition in the first place......

Government at any level is never satisfied with the amount of power it has, especially when the matter under discussion is a litmus test to so many voters, and the matter also involves collecting substantial amounts of tax revenue.

So you can buy as much as you want from govt approved vendors, but since your Mommy the govt knows your business better than you do, it protects you from making your own and selling a little of it in order to buy the kids some shoes by confiscating your assets and putting you in prison if you get caught , but not usually until the second or third time these days.First time offenders with no criminal record generally get off on probation or with a very short jail sentence by paying a heavy fine.

Of course the idiots who believe the answer to every problem relating to commerce is more government will tell you that homebrewed booze is illegal because it is poisonous and a sip of it will make you blind or worse.In rare cases this has proven to be true-but the numbers of people who have been poisoned is miniscule in relation to the number who haven't and all the cases I ever heard about personally involved Prohibition era liquor made by amateurs who knew no better or crooks interested in a fast buck.These cases were well before my time.

My maternal Grandfathers hired hand, who was intellectually challenged to a great degree was reputed through the community to have been temporarily blinded by bad shine but nobody else was blinded and everybody was getting their booze from their regular old suppliers, and I had it straight from my Granny Rosie that she could only keep a bottle of rubbing alcohol for first aid purposes by carefully hiding it from the hired hand, who would drink if he could find it.He found it on several occasions but it never did kill him.This was back in the fifties.

That side of my family were teetolars to the last man and woman at that time.If the hired man had worked for my other grandfather, as much good shine as he could have drunk and still worked would have been included as part of part of his bennies package, which consisted mainly of a room and meals at the family table in either case.

Nobody in his right mind will take a chance on selling lead poisoned or methanol laced moonshine these days, because the traditional method of dealing with such people is still in effect-we shoot them or burn them out. Americans are all very violent pistol packing felons, as any good holier than thou idiot will happily explain to you.;-)

Because one of the 1st taxes was on distilling - inspiring the Whisky Rebellion. It was also one of the 1st examples of creating a protected market - George Washington's distillery.

Making it oyurself is cheating the tax man. The tax man hates being cheated.

And you can only brew so much wine/beer. Used to be unlimited mead - but no longer.

Corn ethanol for human consumption is ok, Everclear is the first choice when it comes to corn ethanol.

Corn for foodstuffs and animal feed are ok.

Corn ethanol to fuel automobiles is a no no.

But then, corn's price was low and a new market had to be developed so farmers could sell their corn, period, so the ethanol industry was born.

The corn inventories decreased and the price increased, all because of the subsidized corn ethanol industry.

What was a new use for surplus corn supplies can now be retired.

Every good mechanic will tell you that ethanol is tough on engine parts and doesn't have the power of gasoline.

Time to end the corn ethanol for fuel program.

Small cars with diesel engines can burn canola oil, which makes a much better fuel than an oil for human consumption. I don't use canola oil in any food, so sorry. Formerly known as rapeseed, it makes a good lubricant.

Olive oil and sunflower oil are the best for human consumption.

Good old Oklahoma crude for your car's engine.

A Harvey Wallbanger for me.

From @Bioblogger:

What ended was not a direct payment to farmers or ethanol biorefineries which is what people think when they hear the term "ethanol subsidy." Actually, what ended was VEETC which was an incentive to BLENDERS of ethanol. The blenders have been the oil refineries! Now, indirectly, this incentive helped the ethanol industry emerge and grow because it essentially bribed a resistant industry to accept ethanol in place of their own oxygenate, the toxic MBTE. So the question now is what will the oil industry do to make up for the missing incentive? What do most industries who control the market do when they see a loss of subsidies but no competition to their sales? They pass the difference on to their captive customers.

The only way to mitigate price increases at the pump is reduce our dependence to one strategic commodity by providing biofuels alternatives.

Growth Energy has it right with their Fueling Freedom Plan. We need to shift the "ethanol subsidies" toward building a competitive biofuels infrastructure that includes blender pumps, biofuels pipelines, and flex-fuel vehicles. It could easily be financed by reducing oil subsidies (in addition to VEETC) in their various forms.

Without rehashing food vs. fuel and fertilizer pollution propaganda against biofuels I can only ask two questions...

1 - Are the processes used to produce fossil distillates getting cleaner (i.e., oil spills, heavier crude, fracking), cheaper (i.e., economic collapse and food prices tied to oil price spikes), safer (oil resource wars and access security), with a lower carbon footprint (i.e., oil sands and shale oil excavation and refining)? I ask because I know that the processes used to produce biofuels distillates are getting cleaner, cheaper, safer, with a lower carbon footprint.

2 - Also, how many new oil refineries have been built domestically in the last 30 years? Answer, zero. The number of advanced biofuels biorefineries (though much smaller in scale) is set to expand exponentially once we have successful initial deployments of emerging technology (see

All economic justification for the subsidy (if there ever was one) was lost when Congress passed the 2007 RFS requirement that mandated that blenders had to use a certain amount of ethanol in their gasoline. The question of bribing the blender doesn't arise they were forced to buy the stuff by law. All that the subsidy was doing was paying oil companies to obey the law. Wish we could all be so lucky.

The underlying premise was for the 2007 RFS requirement was to provide a bridge to cellulosic ethanol. I think most people would agree that if we could find a way producing cellulosic ethanol that would be a good thing - it would be a renewable fuel that would be an effective substitute for gasoline in terms of density and portability. Alas, the results of cellulosic ethanol so far have been disappointing. It is also clear at this point that viability of cellulosic ethanol has nothing to do with the distillation process but rather at the front end in getting the enzymes to break down the cellulosic material. Thus continuing to support corn based ethanol through a mandate forcing consumers to purchase an inferior product at a higher price(to say nothing of its environmental impact)makes absolutely no sense.

As you say, "All that the subsidy was doing was PAYING OIL COMPANIES to obey the law." It hasn't been a direct subsidy to "industrial farming" combines. The law is more important than the subsidy to ethanol producers. If Congress rescinds EISA in addition to the subsidy then there is no market for biofuels production because there will be no reason for the oil companies to support them.

The penalty for not complying isn't much for the oil industry, particularly since it is to their advantage to see competing biofuel alternatives fail to come to market. Oil companies make money on crude (the feedstock) not on refining. They can't control biomass feedstocks so they don't support blending biofuels.

I think most people would agree that if we could find a way producing cellulosic ethanol that would be a good thing -

No for 2 reasons:

1) The process is unlikely to return the post process material to the land from whence it came and reinvested to land of that which it was divested.
2) If the process is biological in nature it will escape into the biosphere and wreak havok on the environment. No one will be pleased when their 100 year old wood turns to mush.


The Renewable Fuel Standard (RFS), amended by EISA 2007, requires that a certain volume of renewable fuel be blended with the US fuel supply. The current federal volume mandate essentially equates to a requirement that all gasoline be blended with 10% ethanol, which is the maximum blend allowable in non-FFV's because of operational concerns; however, increases in the future req'ts and declining US gasoline consumption result in something called the "blend wall" ( where the mandate requires a volume greater than 10% of all gasoline used in the US.

Consequently, ethanol producers are pushing EPA to allow the use of 15% ethanol in cars, which seems to be OK for newer cars but could be a problem for older vehicles (

So the state mandates in Louisiana and elsewhere requiring 2% ethanol are pretty much just political posturing by local representatives to make it appear as though they are doing something to support renewable energy. In reality, nearly all the fuel in the country is being blended with 10% ethanol regardless of state mandate due to the federal requirements; therefore the state mandates do not add to the cost as the author posits.

"Regardless of what happens to prices, ending all tariffs and letting the free market set prices is a very good thing in and of itself. "


What complete nonsense!! The elimination of the subsidy doesn't mean that there is a "free market". A comment like that makes me believe that the author doesn't have the first clue about the ethanol market. As long as there is an RFS mandate for the use of ethanol there is no free market with or without the subsidy.

As long as there are no alternatives to oil, there is no free market for liquid fuels. Just look at how many nations have nationalized their oil industries and control the access to oil by developed and undeveloped nations alike. The U.S. is far more vulnerable now than the '70s regarding energy security. Would we care about Iran, Iraq, Kuwait, Libya, and Saudi Arabia, and Venezuela if not for our oil dependence? Is our dependence fostering the growth of political tyrannies?

The amount of consumer confusion surrounding ethanol is profound. Subsidy or not, when you burn ethanol in your auto, the amount of work you get out of it is less than for a gallon of unadulterated regular gasoline. But so many people treat a gallon of E-10 as if it were functionally equivalent to a gallon of E-0. According to the near futures commodity charts at the COB today, wholesale gasoline closed at $2.75 a gallon, but the price I would have to pay for an equivalent amount of energy from ethanol was about $3.17 a gallon (the $2.11 closing price / .66 energy value = $3.17.). Per unit of work, ethanol today costs 15 percent more than unleaded regular. Not a bargain at all.

More than likely costs go up a couple pennies rather than the 4 cents calculated by the AAA.

Given the week to week variability in prices, would the average consumer even notice ? - I doubt it.

What if we had a farm run completely on horsepower. Could not the ethanol produced be used to power the still and create still more ethanal?

And wouldn't this be renewable and carbon neutral?

I am not convinced that ethanol takes more energy to produce than is in the ethanol. The example above proves this not to be true in theory.

How can anyone produce ethanol if it costs more energy to produce it than the energy is worth without subsidies? And the end of subsidies should then be the end of ethanol but this is not the case.


Your questions are vaguely worded, and I'm not sure just what you are asking..If you mean to ask whether it is possible to farm successfully with horses and without diesel or gasoline, the answer is yes, in a very limited sense-you can produce a surplus and run a society by such farming.It would not be possible to convert from industrial agriculture back to literal horse powered farming nowadays however for numerous PRACTICAL reasons.

Maybe if there were to be a huge dieoff, the remaining people could do it.

It might be possible to burn ethanol in order to distill more ethanol, but this would be a very uneconomic thing to do-firewood, coal, natural gas, and crop residues are plentiful and far less valuable than liquid motor fuel.

It is easily possible to produce enough ethanol "on the farm"-this would most likely mean at a small distillery located in each farming community- to run the farms themselves, but this would require putting new engines in just about every farm machine in the country.It might be possible to modify some of the larger , newer engines cheaper than buying new ones if this were to be undertaken on a large scale.

You would still not achieve carbon neutrality, however, because agriculture consumes vast amounts of ff indirectly, in the form of fertilizer, food containers, shipping, refrigeration, and so forth, not to mention the actual construction of the machinery used on farms.

Peak oil does not necessarily imply short term or medium term starvation in countries with plenty of resources because such oil as they do have or can buy by selling other resources can be diverted to agriculture.

In poor countries it implies starvation in the short term, which is happening right now as I type this comment.Countries such as Egypt are in a very bad spot-they cannot possibly produce enough food to supply their own needs, they have nothing of any consequence to sell or trade, and the possibility of continuously borrowing and never repaying any principle or even realistic rate of interest has just about played out.

The energy balance for gasoline is slightly less than 1 (1:<1) and getting worse because it is taking more energy now than before to explore, extract, transport, and distill crude that is getting heavier & heavier (think tar sands, shale oil, etc.).

Meanwhile the energy balance for ethanol has been steadily improving over the last several decades for a large number of reasons - better crop yield per acre, low tillage farming, expanded feedstocks, preprocessing of feedstock, replacement of fossil inputs at the refinery, more efficient fermenting processes, better transport infrastructure, etc. The room for innovation is boundless, particularly as more low value cellulosic feedstocks are factored into the analysis.

The energy balance myth for ethanol "taking more energy to produce than it delivers" is erroneous - it is based on '70s research results using '70s data. It has been firmly dispelled by the Argonne National Laboratory GREET model analysis using current cultivation and process efficiency data. Last I heard corn ethanol is better than 1:2.3 for energy efficiency. Sugar cane is much more efficient because of the density of sugar in the feedstock. Of course, sugar cane is not readily available for domestic production of ethanol.

The positive energy balance will mushroom as cellulosic feedstocks conversion become viable. Companies like POET, Ineos Bio, Zeachem, Enerkem, Fulcrum, are busy building facilities that use "waste feedstock" such as green waste, MSW, woody biomass, etc. which do not require cultivation or harvesting energy. Their energy efficiency is rated based on feedstock & process but it generally ranges higher than sugar cane. Needless to say, there is plenty of waste to use as feedstock in the U.S. - particularly green waste and MSW near cities where the demand for light vehicle transport fuels is highest.

In short, if energy efficiency is you primary driver, gasoline is a poor solution that is getting worse. We need to insure the emergence of alternatives that leave the door open for improved energy efficiency.

The energy balance for gasoline is slightly less than 1 (1:<1) and getting worse because it is taking more energy now than before to explore, extract, transport, and distill crude that is getting heavier & heavier (think tar sands, shale oil, etc.).

The first part of this sentence is absolutely false. The refining process converting crude to gasoline does have and EROEI of <1 (I've seen values around 0.8). However, the extraction of crude has a tremendously high EROEI (which is why its such a desired commodity); world average is around 20 and some older fields are still much higher than that. You are right that unconventional sources do have lower EROEI's, but these are likely still net energy gains and they typically convert energy in the form of natural gas to produce liquid fuel, which is much more valuable. Thus, even if the tar sands barely break even in terms of EROEI, they will still be extracted as long as NG is cheap and oil is expensive.

The positive energy balance will mushroom as cellulosic feedstocks conversion become viable.

I'll believe it when these companies become commercially viable, independent of any gov't subsidy. Read any of Robert Rapier's critiques of the many cellulosic ventures thus far for more info about why these efforts have repeatedly failed to perform as advertised.

In short, if energy efficiency is you primary driver, gasoline is a poor solution that is getting worse. We need to insure the emergence of alternatives that leave the door open for improved energy efficiency.

What are you talking about? Do you really think there's something preventing more energy efficient technologies from entering the market? The oil companies surely have plenty of political clout, but I don't think they're capable of completely railroading technologies that offer better performance than gasoline (hell, they'd buy up that company and sell it themselves). America isn't a completely free market, but it's pretty free considering our size, and surely if a fuel offered 50 mpg at $2/gallon, there's no one who would pass it up (oil companies included).

The positive energy balance will mushroom as cellulosic feedstocks conversion become viable. Companies like POET, Ineos Bio, Zeachem, Enerkem, Fulcrum, are busy building facilities that use "waste feedstock" such as green waste, MSW, woody biomass, etc. which do not require cultivation or harvesting energy.

There is an upper limit to the energy that plants can 'extract' from the sun and make available for human consumption. I believe that plant life converts sunlight, optimally, at around 1% efficiency. I'll leave more complicated number crunching to those better equipped, but I believe the upshot is that using plant-based energy will never be more than a niche contributor to the overall energy picture.

"using plant-based energy will never be more than a niche has until very recently always been the primary contributor to the overall energy picture"

Fixed that for you.

For the umpteenth time, our energy problems become tractable only if we reduce our demand for energy by an order of magnitude or so. Then a reasonable scale up of renewables and some other adjustments should be able to allow everyone to live adequate lives, especially if we can get the population monster under control.

As Nate likes to say, "We don't have a shortage of energy, we have a longage of expectation." (Or something to that effect.)

Oh I agree totally with your basic argument. I have serious doubts that even the present population can be supported on just the 'interest' earned on the earth's solar input, as opposed to the 'capital' of stored fossil-fuel energy. Unless the nuclear option actually turns out to be viable.

My general rule of thumbwild-ass-guess for USA is that we would have to reduce our energy usage by about 90% to stay within our solar-mandated energy budget.

It sure doesn't seem likely that we will do the power-down, much less address the population issue, much less address the climate change issue.

Yep, it's looking grim. The only glimmers I see are two movements that seem to be spreading fast" Transition and Occupy. If both take off like wild fire over the next year or two, there could be a lot of pressure brought to bear on TPTB. More and more people are seeing the entire power structure as having no legitimacy. Congress is so beholden to Oil interests, for example, that they almost couldn't manage to keep the wheels on because they wanted to play political games with one pipeline.

The whole FIRE sector is more and more not seen as functioning to make things work to the advantage of regular folks--facilitating home ownership, insuring against disaster...--but instead is being seen more and more for the destabilizing, rip off artists that they are: throwing people out of their homes, losing people's retirement money, getting filthy rich in the process, and never paying any serious consequences for their criminal activity.

I didn't think the republicans could get more craven than putting oil execs in the white house. But now they seem to be planning to put a Milken-type leveraged buy-out sleaze bag in. Incredible.

But then perhaps that's more honest in its way than the bait and switch obama turned out to be (not to my surprise, but to that of many others.)

"The positive energy balance will mushroom as cellulosic feedstocks conversion become viable. Companies like POET, Ineos Bio, Zeachem, Enerkem, Fulcrum, are busy building facilities that use "waste feedstock" such as green waste, MSW, woody biomass, etc. which do not require cultivation or harvesting energy. Their energy efficiency is rated based on feedstock & process but it generally ranges higher than sugar cane. Needless to say, there is plenty of waste to use as feedstock in the U.S. - particularly green waste and MSW near cities where the demand for light vehicle transport fuels is highest".

Give me a break. If cellulosic ethanol is so good then where is it?
So far all that we have heard is promising bullshit and millions squandered in crackpot schemes with little chance of success. For one hundred years this has been promised and it is still and probably never will be commerically viable. Nuclear Fusion Mk2- perpetually nearly there.

Distillation a of 4% broth takes energy and lots of it. The pre-treatment step is an energy sink. The logistics in moving all the biomass is rearely taken into account. This process does not respond well to variable feedstocks.

MSW maybe? and a big MAYBE. It is very variable and contaiminated with all sorts of competing bacteria.

Have you even considered the impact on soil if the biomass were completely removed. The soil organic carbon would plummet. You should look at the loss of topsoil thickness in Iowa. It has halved in 30 years due to monoculture cultivation.

Here is a few Golden Rules for any chemical process:

1. There are many things that come be done with chemistry. Not all of them make sense (especially commercially)
2. Follow the energy - keep in mind the first and second laws of thermodynamics.
3. Keep it simple - every step incurs cost and expends energy. Every step reduces the final yield of desired products.

Not to mention countless engines ruined by ethanol (valves sticking and bent), by water and dissolving fuel tanks, fuel lines and other internal parts.

Could not the ethanol produced be used to power the still and create still more ethanal?

5 to 15% alcohol in your mash
Ethanol. 1 gallon = 84600 Btu
To boil one gallon of water starting 70°F in 1 hour you will need 8.3 x (212-70) = 1178.6 BTU

But a still needs to boil a water/alcohol mix and then in the column reflux happens with many state changes.

Tables 1 and 2 show that efficient values for total steam energy consumption, when processing a grain-type feedstock, is 20,877 BTU's per gallon ethanol (2,441 BTU/gallon for cooking and 18,436 BTU/gallon for distillation). This excellent efficiency is obtained only with recycling of hot liquids, good boiler system maintenance and complete insulation.

The ratio of the heat in alcohol VS the energy to distill as you can see does not "pay" to do what you are wanting to do. Laws of thermodynamics and all.

I am not quite following your argument.

Ethanol. 1 gallon = 84600 Btu

is greater than
Tables 1 and 2 show that efficient values for total steam energy consumption, when processing a grain-type feedstock, is 20,877 BTU's per gallon ethanol (2,441 BTU/gallon for cooking and 18,436 BTU/gallon for distillation).

Most of my knowledge of ethanol comes from the great book by David Blume, "Alcohol Can Be a Gas" which is IMHO the bible for ethanol.
Also I have experimented somewhat with it, tho' it is illegal.
A group I'm with has gotten the Federal permit to make ethanol for fuel, and I can relay some results.
I have found that slightly more than one square foot of good solar will give me anywhere between 2 and 6 ounces of distillate a day.
A sunny day, of course.
That's 2 ounces without tracking, and 6+ ounces if the unit follows the sun.
I use a simple pot still, with 3 square foot mirrors, a quart brown longneck beer bottle, a clear outer insulater jar, some copper tubing, two corks, and a collector jar.
After 2 or 3 runs through the pot still, I measured near 140 proof, and it could be kicked up even more with another run or two.
Since I suspect a great deal of the energy used is in heating up the mash to still, the use of solar I can tell you as a fact does work.
We should be able to greatly increase the EROEI of making ethanol by using simple sunlight, and if my method were ramped up, I suspect it could supply a good source of liquid fuel.
Two misconceptions I would like to address:
1. The leftover from distilling corn/grains produces a product (DDGS?) which can be fed to livestock which is reputedly more healthy than just the grain alone. So why not, if we insist of feeding our cows grains (which they were not made to eat...) why not at least get the ethanol energy out first?
2. According to Blume, a modified engine (higher compression, etc.) has not only greater MPG than gas, but performs better, runs cooler, and has longer life.
His book is a mountain of information, and he is walking the talk.

And yes, we can not sustain driving our SUV's 3 blocks to the store 10 times a day using ethanol, but then neither can we -- for long -- do it on oil.

Today it's 29 degrees here, with somewhat hazy sun, yet I fully expect to be able to collect an ounce of fuel at days end using my simple little solar device.
Well, maybe not, but at least I'm giving it a shot.
A solar pot still works very well, and with repeated runs using solar energy, it will match the output of a columnar still. I'm guessing the reason columnars are used is the you can get more ethanol faster than re-running a pot still. The end result is still the same -- high quality, very burnable liquid fuel.
Solar distillation needs no outside heat source, so put that in your pipe and smoke it.

I am much more interested in the effects on food stock/food prices.

I'm no statistician, by any means, but I strongly doubt if it is possible to really know with any serious degree of accuracy how much ethanol causes food prices to rise-there are simply too many interlocking feedback loops involved.

It is hard to honestly quantify the actual value o0f the leftovers, which are fed as livestock feeds, because the presence of this feedstock necessarily alters the production and price of other feeds, which in turn with increased demand for corn influences farmers planting decisions in ways hard to really quantify accurately.....

But I have no doubt the prices of wheat, corn, rice, and soybeans are substantially higher than they would be without the ethanol industry sucking up so much corn and causing land to be diverted away from soybeans for example.

If you live at the bottom of the food chain, this is a grave problem as prices of basic staples such as cooking oil and meal and flour have risen dramatically.

If you eat higher up the chain, as most of us here in this forum do, the actual extra expense is hardly noticeable-you can make a LOT of supermarket bread and fast food hamburger rolls out of a bushel of wheat.

If I had to make a guess, I would take the average of all the professional opinions I could find as being within well within the ballpark.

I do believe that the average price of gasoline will likely go up by the full amount of the expired credit, which would amount to 4.5 cents a gallon. It might stem demand ever so slightly such that the price only rises but 4.2 cents, but refiners are going to pass those extra costs on. And I am perfectly fine with that; the government has no business subsidizing consumption, which is what they have been doing with this tax credit.

Further, as others have noted -- and I have repeatedly pointed out -- when the RFS was passed the justification for the subsidy ended. Refiners were being paid to obey the law. Yet note that it was never the oil companies arguing against getting rid of the credit; it was the corn farmers and ethanol companies. So this should shed a bit of light on who the ethanol companies really thought were benefiting from the credit -- even as they were claiming it was to the benefit of the oil companies.

The reason this subsidy ended so quietly? Ethanol is already needed as fuel, so it isn't likely to be replaced by anything, certainly not oil which is currently unable to meet worldwide demand. If the mandates end quietly too, then the only thing it will indicate is that the world/US is too desperate for liquid fuel for any of it to matter.

For my part, I'd like to see EV and solar feed in tariffs and production mandates. Would do a heck of a lot more good than ethanol and would be a far cry better than fracking, tar sands and the oil shale the oil companies are trying to shove down our throats...