Download now: King Coal Triple Play

Ethanol Investing Getting Riskier

Time to Buy Ethanol Stocks?

Written by Jeff Siegel
Posted June 4, 2014 at 3:01PM

The big news this week: the release of President Obama’s new climate change plan.

Overzealous tree huggers are dancing in the streets, and those who choose to trivialize the scientific consensus on climate change are re-loading their rhetoric.

Neither side wins, mind you. Nope, the only winners here are those special interests who pimp their favorite politicians and the media gatekeepers who can milk this nonsense for some serious ad revenue.

As for me, if you’re a regular reader of these pages, you know I tend to side with the IPCC on its analysis of climate change data. You also know that while I take this position, I also hold firm that the solution to mitigating the effects of climate change cannot be found through government bullies with their frivolous mandates and additional taxes on already overburdened taxpayers.

I’m a free market guy all the way, and I truly believe that climate change, as well as many of our other environmental burdens, are best addressed by an honest free market where competition is the catalyst for change... not government interference. After all, the latter almost always results in exacerbating a problem instead of rectifying it.

Beyond the Fleecing of Taxpayers

Last week, the Environmental Working Group released a report entitled, “Ethanol’s Broken Promise.” It’s a must-read for every taxpayer who’s being forced to subsidize an industry that is not only an economic burden, but an environmental one as well.

The release of this report coincides with an upcoming EPA hearing scheduled to discuss reducing the amount of corn ethanol to be blended into gasoline — as per the requirements of the Renewable Fuel Standard mandate, which requires 36 billion gallons of renewable fuels (mostly corn-based ethanol) to be blended into transportation fuels by 2022.

The Renewable Fuel Standard began with the Energy Policy Act of 2005 under the Bush administration and has continued unobstructed under the Obama administration. Today, in 2014, ethanol continues to be produced in massive quantities in an effort to meet this mandate.

The result — beyond the fleecing of taxpayers — is a vibrant industry subsidized by the government that is fouling up the environment even worse than before the standard was put in place. This, plus steady pressure on lawmakers from both conservatives and liberals, seems to have finally instigated some action by the suits over at the EPA.

Ethanol’s Broken Promise

In “Ethanol’s Broken Promise,” you will find the following excerpt that pretty much sums the whole thing up...

The Environmental Protection Agency’s pending proposal to cut the amount of corn ethanol that must be blended into gasoline in 2014 by 1.39 billion gallons would lower U.S. greenhouse gas emissions by the equivalent of 3 million tons of carbon dioxide (CO2e) — as much as taking 580,000 cars off the road for a year. It is now clear that the federal corn ethanol mandate has driven up food prices, strained agricultural markets, increased competition for arable land and promoted conversion of uncultivated land to grow crops. In addition, previous estimates have dramatically underestimated corn ethanol’s greenhouse gas emissions by failing to account for changes in land use

And there you go.

Another government plan to save us from ourselves has proven to be little more than a gift for special interests and a financial burden on taxpayers.

Now, I don’t know how this whole thing is going to play out. But I suspect ethanol stocks will get hit pretty hard if the reduction does get approved. Not that I’d play ethanol stocks anyway. They continue to be quite risky.

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

Jeff Siegel Signature

Jeff Siegel

follow basic@JeffSiegel on Twitter

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.



Related Articles

Investing in Clean Coal
Once again, the clean coal hustle is making an appearance. And once again, we're seeing just how useless it really is. Clean coal continues to flop, yet the government continues to support it.
Investing in SolarCity (NASDAQ: SCTY) and Creative Marketing
It seems like an odd combination, but SolarCity may be onto something with its recently-announced deal with Groupon.
The Death of Coal Plants
New regulations for coal-fired power plants are expected to be announced next week. Here's what it means for you and your portfolio...


Coal Investing Destroyed After Centuries of Dominance
Renewables Take Over
Nuclear Investing After Iran Deal
Look at China
Where is the Oil Cycle?
Marijuana Bank Investing
3 Guaranteed Profits: Gambling, Prostitution, and...
Russian Stocks are Cheap
Fortune Favors the Bold
Invest in the Lithium Revolution
Lithium Demand is Going Berserk
Renewable Energy is Killing Nuclear Power
No Hope for Nuclear
Putin and Saudi Arabia: Oil Dream Team Meet
Marijuana Bank Investing
3 Guaranteed Profits: Gambling, Prostitution, and...
Elon Musk's Lithium Revolution
Supply! Supply! Supply!