Ethanol Industry Scam

The EPA is Screwing You

By

Oh, this one just keeps getting better and better...

The EPA — or what I like to call the Environmental Pawn Agency (because since its inception in 1970, it has served as an excellent pawn for whoever happens to be squatting at the White House at the time) — decided a few years back that it would allow higher concentrations of corn-based ethanol in gasoline.

Why would the EPA do that?

Two reasons:

  1. Big Ag worked around the clock and “donated” millions of dollars to various campaigns to ensure that this particular welfare scam keeps funneling taxpayer dollars away from our paychecks and into the hands of ADM, Cargill, and Monsanto — the latter being Obama's “inside guys” who continue to dictate agricultural policy. Who do you really think drafts the farm bill?

  2. The government is terrified by the reality that this country's economy is directly tied to its reliance on something that it absolutely must get from other countries, including those who seek to destroy what they lovingly refer to as the "Western Imperialist regime"... and a little extra corn in the tank provides a bit of breathing room.

But not everyone's doing cartwheels over these higher concentrations of corn-based ethanol...

A handful of grocery associations, petroleum groups, and automakers actually filed suit against the EPA back in 2010 in an effort to challenge the new rule...

They came up short as the U.S. Court of Appeals sided with the EPA last week, citing the various groups' inability to prove that they've been harmed by the increased concentrations that would add another 5% to what's being blended currently.

Some folks claim the court's decision is irrelevant because few will sell the increased blend, as they don't want to be held liable for potential damage to engines caused by these higher blends.

I don't know much about whether or not the higher blends will damage engines.

But I do know that relying on more corn-based ethanol to displace a bit of foreign oil is pretty much the dumbest way to do it.

The Puppet Masters Rejoice

They keep trying to downplay the seriousness of the connection between ethanol production and this year's drought and high food prices.

But the fact is more than 40% of this year's mostly depleted corn crop will be diverted from food and livestock to gas pumps all across the nation.

And now we're hearing Brazil is looking to increase its percentage of ethanol as well — but because mills wouldn't be able to meet demand if the blend is raised this year, they'll be looking to the United States for corn imports...

Oh, the Big Ag puppet masters would love that.

With monocrop reliance and the irresponsible overuse of pesticides and synthetic fertilizers, they'll squeeze every last ounce of nutrients from our once-hearty soil because there's big bucks in biofuels. And Washington always makes good on those welfare checks.

Sure, they'll boast the use of ethanol has reduced oil imports by hundreds of millions of barrels. But if the trade-off is wiping out what little arable land we have left to get a transportation fuel that takes more energy to produce than it delivers, what's the point?

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Demand, Demand, Demand

If we're serious about ending our reliance on OPEC, we need to stop acting like this is solely a supply-side problem.

It is not.

Our dependence on foreign oil is just as much a demand-side problem. And the solution to this problem will not be found in using our farmland to grow fuel.

I know we spend a lot of time here at Energy and Capital talking about things like domestic oil and gas production as a way for us to limit our reliance on OPEC. Certainly a wealth of unconventional liquids operations and enhanced oil recovery technologies can serve to facilitate our migration away from OPEC.

But if we focus solely on supply — and don't take the appropriate measures to curb demand — we'll be running in circles for decades.

Yes, we absolutely need to take full advantage of our domestic oil and gas resources. As I've mentioned in the past, natural gas alone can help us displace 42% of our OPEC oil reliance if we power our trucks and buses with it.

But if the endgame is to send OPEC packing, we absolutely can't ignore the value of affecting demand...

That can be done with a variety of things like expanded mass transit, hybrid and electric vehicles, high-speed rail, and one day, hydrogen fuel cell vehicles.

Look, if we legitimately want to lessen our reliance on foreign oil, and we want to do it responsibly — without raping our farmland and driving food prices up — then all responsible options must be on the table.

These include everything from domestic oil and gas production to the integration of transportation systems that don't rely on an antiquated internal combustion engine.

Moving forward on anything less will never allow us to break the shackles of OPEC.

To a new way of life and a new generation of wealth...

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Jeff Siegel

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Jeff is the managing editor of Energy and Capital and contributing analyst for the Energy Investor, an independent investment research service focusing primarily on stocks in the oil & gas, modern energy and infrastructure markets.  He has been a featured guest on Fox, CNBC, and Bloomberg Asia, and is the author of the best-selling book, Investing in Renewable Energy: Making Money on Green Chip Stocks. For more on Jeff, go to his editor's page.


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