Corn Base Ethanol is just another Scam

[dan_s]

When President Bush started pushing ethanol in 2005 it was when "Peak Oil Supply" was a legitimate FEAR. Since then, using vast amounts of good farmland to grow "fuel" is a leading cause of high food prices and starvation in 3rd world countries. Now we know that adding ethanol to gasoline actually increases air pollution since it makes gasoline evaporate more.
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From Energy & Capital newsletter:

To propel climate and farmer-friendly initiatives without stoking higher fuel costs.

This is how Bloomberg described President Biden’s decision to grant a fuel policy change in an effort to boost sales of corn-based ethanol.

Never mind the fact that corn-based ethanol is NOT “climate friendly,” nor is it anything of value to farmers. Real farmers, that is. Not those massive industrial corn producers who get paid by the government to grow fuel instead of food.

Truth is, ethanol has long been one of the greatest welfare scams of all time because it’s always been a bipartisan scam.

Midwest republicans love it because, well, there’s a shit ton of corn in the Midwest, so it’s great for local economies.

Coastal democrats love it because it allows them to claim a notch in the bed posts of environmentalists who don’t realize that there’s nothing environmentally friendly about corn-based ethanol.

In any event, when elephants and jackasses agree on something, that inevitably means...

Taxpayers get fleeced

Back in 2005, under the Bush administration, the Renewable Fuel Standard (RFS) was passed. The RFS essentially required that transportation fuel in the US contain a certain percentage of “renewable fuel,” which has pretty much always been corn-based ethanol.

We were told this was being done as a national security measure as well as a measure that would enable the reduction of greenhouse gas emissions.

Since then, all the data show that this has not reduced greenhouse gas emissions, and in terms of national security, it has been superfluous as the U.S. is now the largest producer of oil in the world.

With the program proving to be a failure, you would think it would’ve been cut.

But that’s not how things work when policy is dictated by special interests, which in this case is Big Ag.

Regardless, the RFS was really the start of this welfare scam which has likely cost taxpayers more than $100 billion since 2005 from both direct and indirect subsidies. And not coincidentally, most action taken on ethanol policy tends to happen during election time, when these guys need some of that filthy lucre disguised as “campaign contributions.”

Certainly Biden’s giving it a go now, because, well, we’re less than 10 months away from the next election.

Bloomberg journalist Jenifer Diouhy chimed in on Biden’s recent decision, writing …

"It’s a victory for some of the nation’s top corn- and ethanol-producing states, including politically important Iowa and Wisconsin, because it will allow filling stations there to offer E15 year-round, instead of being hindered by air pollution limits that have long curbed summertime sales."

Great news for Big Corn, bad news for drivers.

You see, in order for refiners to keep pace, this decision will require the construction of new infrastructure. And guess who’s going to have to pay for that?

I’ll give you a guess...

Not the corn ethanol producers.

Nope, that cost will be passed along to drivers.

According to EPA data, this could add as much as an extra 12 cents per gallon to produce.

Now typically, when this kind of stuff comes up, the American Petroleum Institute opposes adding more corn to our gasoline. It’s actually been that way for a long time, particularly because more ethanol means more work for refiners and pipeline operators.

But these days, we’re not hearing much, and this seems to be the result of Big Oil and Big Ag joining forces to unite against the EV market, which isn’t a particularly big threat now, but it will be.

Seeing these two groups work together after more than a decade of fighting serves as an excellent indicator that, despite a recent slump in sales, EVs represent a serious menace for those industries that rely on the long-term viability of internal combustion.

Of course, the long-term viability of internal combustion today is similar to the long-term viability of the typewriter in the early 1980s.

The personal computer was coming, and insiders knew it. It was just a matter of time.

Same is true with EVs.

Big Oil, Big Ag, and every other industry that makes billions of dollars off the very existence of the internal combustion engine knows that change is coming. So of course, that means for investors like us, we’re staking our claim now — while the getting is still good.

That’s not to say the internal combustion engine is going to go gently into that good night. In fact, I’m personally profiting from a new bull market in oil that has been fully vetted by our in-house oil & gas guru, Ketih Kohl.

If you’re unfamiliar, Kieth is the guy who helped investors like you land a 450% gain on Gran Tierra Energy (NYSE: GTE), a 540% on DiamondBack Energy (NASDAQ: FANG), and a 1,378% on Valero Energy (NYSE: VLO).