Sunday, May 3, 2009

Government Gamble on Corn-Ethanol Loses Big

Government's always behind the curve and that's something the Obama administration won't tell you. Several large ethanol producers have gone out of business and many critics are not saying the corn-based fuel isn't as clean as it was claimed to be. Other critics say that the corn is needed to feed people and livestock, not put in gas tanks.

The biggest problem, as always comes in the form of government bureaucrats and their pointy-headed seize-the-moment thinking. Producers were told by the government to produce specific volumes of ethanol, something that doesn't make sense in terms of today's petrol prices and consumption cutbacks due to recession.

Most cars and trucks can't use fuel with any more than 10 percent ethanol without creating havoc to their engines. Some regulators still want to push ethanol content higher but the car companies, you know, the ones which may go bankrupt, won't honor the warranties if an excess of ethanol does damage to the engines.

There are some cars that can run on E85--an 85 percent ethanol content--but with GMs problems and Chrysler's, we're not going to have more of them any time soon. So once again the bureaucrats have failed us, pushing a product that is only economically efficient when oil price spikes to the point where a gallon of gas costs 70% of the price of a bushel of corn. Not the case right now, not with the rise in commodity prices.

More bad news may be found in the fact that ethanol production uses a great deal of energy in the process. Corn-based ethanol produces only 1.8 times the amount of energy used to make it, according to the Wall Street Journal.

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