"In a joint statement, the companies said the study supports the idea that “a large-scale pipeline project is feasible under certain conditions and that a federal loan guarantee is necessary to move forward.”
Meanwhile, the 45-cent-per-gallon tax credit that subsidizes ethanol production is due to expire at the end of the year, and the industry is split over what should be done."
What affect on railroads?
The industry may be split but most of us taxpayers are not. Shut the whole debacle of ethanol down and stop spendning our money!
…Isn’t there a problem with corrosion in large pipes transmitting Ethanol…??
Well, under “Certain Conditions” anything is feasible. This subsidized pipeline will divert lucrative taffic from the railroads. That will be its effect.
This is absolutely disgusting. The two Pols, Harkin and Boswell, are going to try to force investment into an uneconomic project that will hurt the US economy and result in a net loss in economic growth and diminished job opportunities. If you’re a railroad worker please realize that these two Pols are trying to get into your paycheck.
Note well that the so called “Financial Incentives” are but subsidies for the pipeline that will divert investment from projects that will really pay. This will hurt the US economy. Harkin and Boswell do not care about that. They only care about their
Greyhounds: I agree with your overall point. And from the “Green” perspective, ethanol is a loser as well, requiring more energy in total to grow harvest and refine than the output.
But if wealth transfers occur, many Americans would prefer the transfer occur within the US rather than transfer wealth to another country, be it Brazil, Saudi Arabia or China.
And another tree falls in the Amazon…
Kewl…
Nah. If we buy ethanol from Brazil, they’ll have money to buy our corn and beef, or locomotives, or peanuts, or cotton, or wheat, etc. Free trade always means more stuff for both sides - it maximizes the production efficiency of both parties - everybody does more of what they do best.
We need the EPA to test E10 and unleaded gasoline side by side on every new car. Let the public see the fallacy of ethanol reducing our dependence on foreign oil.
Or more of what they do cheapest. And cheapest, as we have seen, is a moving target, China being the latest to begin losing out as its workers get smart and demand more rights and more money.
The ultimate refutation of the free-trade ideology is that 30 years after free trade began really picking up steam our trade deficit continued to worsen monthly right up until the Great Recession slowed our spending on imports. That worsening deficit will resume if we ever see a recovery.
This represents a deplorable transfer of profits and wealth from the United States.
As to ethanol, it is surely the dog that all you good correspondents say, and if we’re not careful we’re going to get it shoved down our throats.
It is ok to cut off subsidies to producers, but perfectly proper to approve the same for a pipeline company? Or better yet, send the jobs and business overseas?
Sure, the ethanol subsidy will go away, but guess what folks, payments under farm programs will skyrocket as a result. (they went to the lowest levels in decades because of ethanol)
Outstanding logic.
"Washington, D.C. — The sultry days of July in the nation’s capital haven’t been kind to Iowa’s biofuels industry.
The ethanol industry is fracturing and under attack inside and outside the Capitol. The industry’s 45-cent-a-gallon subsidy is due to end at the end of the year, but energy bills that could provide a means of extending the tax credit have been delayed, throwing the legislation’s future in doubt."
If the subsidy goes away altogether, no pipe line, but how many idle tank cars? If the subsidy is not extended, what affect?
Will major railroads feel it that much? Will some short lines in the Midwest be devastated?
As I read the last paragraph there was speculation that if the $6 billion per year subsidy goes away, as I believe it should, production will not be much affected since congress requires a substantial volume of ethanol to be used anyway. That consumption would not fall very much seems a reasonable conclusion.
We will still be paying a higher than economically necessary price for liquid fuel, but it will be in the price of fuel as opposed to as a subsidy. Poor public policy, but at least not as bad as laundering the money through the great income redistribution machine in Washington DC.
Mac
Right now, the industry uses well over 10,000 tank cars, and 19,500 covered hoppers. These are very conservative numbers since I really have no idea how many privates aside from the TILX, UTLX, GATX, CITX, ADMX, MWCX, ACFX, DBUX, and FURX fleet are out there. Trinity alone has produced since 2001, it’s 635200 to 648900 series 6300 cubic foot covered hoppers for this service.
I expect the industry will continue, but need to tighten it’s belt further. In addition, it will have no choice but to increase prices. Personally, I don’t want to see the tens of thousands of direct jobs, and who knows how many ancillary jobs go away.
City folks who are mostly the big naysayers of Ethanol, have no idea what this has done for rural America in the way of investments. Where I work, it includes five plants, with a total direct investment of $468 million, 99% of which was private funding or farmers shares. A bare minimum of 230 jobs for those five plants. Indirect investments, such as the costs for railroads is about $8 or $9 million locally now. Add to it, trucking companies for CO² and wet DDG, local track maintenance companies, a transload terminal, mechanical contractors, and inspection firms.
End terminals as well have spent hundreds of millions to handle this traffic. The big players, UP, CP, CN, CSX, NS, and BN have heavily competed, and are still competing for this business.
Grain elevator managers are also reliant upon these plants, as it has removed a lot of risk from their shoulders. No longer do they have to worry about export prices and transport (or how much they
And pay twice as much to grain producers in the form of price subsidies as was happening before the ethanol boom began in 2001. That is exactly what will happen when you remove 30% of their market (the most stable portion).
Why all of a sudden are people upset with a subsidy that has been around since the days of the Carter Administration?
Wow do you have a vivid imagination. Take a look for example at a new rail car. The truck frams are imported from Brazil. This explains Brazil’s growing trade surplus in recent years, with the U.S. being the largest consumer. Those jobs casting truck frames used to all be in the U.S.
Trends in U.S. exports to Brazil since 2005:
Meats down 20%; Animal Feeds down 15%; Wheat up (due to draught in Brazil 2008); Railway transportation equipment down. This left a net deficit in 2006 of $7.2 billion.
This has been an ongoing trend since the 1970’s, where your neighbors are so willing to trade you and your job down the river to make a few more bucks. Ask the folks at ASF.
What inputs did Pimentel use for that report? When was it written? How many people have copied it without bothering to really examine it? How has agriculture changed since that time?
Overwhelming evidence says, his report, and others based upon his findings are flawed to the extent, that they have no relevancy. It is kind of laughable to be honest, basing the overall energy content of corn with practices that change from state to state, and even county to county. For example, no one here uses irrigation in corn., yet that was an input he used for the industry. Many producers here use manure instead of fertilizer, another input that skews his final theory. Natural gas for drying, farm to market transport, tillage practices, I can go on. And they all flaw the resulting reports.
But the biggest flaw, is his ignoring the impact of yields. Nationwide in 2009, yields reached the 165.2 bushels per acre level. That is 10% over the 2008 figure. In Iowa, which accounts for 20% of corn produced, it was up 13.4% in 2009 despite lower planted acres. And from what I see today, we could surpass those numbers. I know several producers who will look at 214 bushels per acre this fall if all goes well.
Then there is process used to produce ethanol. Pimentel used a wet mill as a model. That’s fine, except a majority of ethanol produce here are at plants that use the dry mill method. And even those plant process have been refined over the last 8 years to bring further yield per bushel (new enzymes, process water control, and even a new microwave drier). &nb
What do you mean “all of a sudden”? I’ve been upset with the subsidy since the Cater Administration.
Really, there’s no good reason to subsidize any economic activity/industry. Including farming. Subsidies are just a politically motivated redistribution of wealth. They have an overall negative effect on the national well being. Sure, folks in Iowa have benefited from the ethanol subsidy. How could they not benefit? The government is literally taking money away from people in New Jersey and giving it to people in Iowa. Yes, there are more jobs in Iowa. But there are also fewer jobs in New Jersey. The job losses in New Jersey will exceed the gains in Iowa.
As to free trade, it’s not and “Ideology” or a “Belief”. It’s been studied and analyzed by economists for centuries. The people of both the importing nation and the exporting nation experience a net welfare gain by being able to freely exchange goods and services with each other. If you can show otherwise please go right ahead. You’d probably get the Nobel Prize in Economics if you could because you’d prove just about everyone with a PhD in economics has been wrong.
I don’t think you, or anyone else, can do that…
I wonder if these economists ever leave their office, get their noses out of reports and take a look outside. Pretty sad when we are turning into a service economy. But, hey, free trade. I’m sure someone somewhere benefits.
We get it, you don’t like subsidies and “big government”. That’s your belief, and that’s fine. But not everyone subscribes to that.
PS. Your signature is kind of amusing, though. Railroads never met a subsidy they didn’t love. Would they be as effecting and efficient without them…? One can only wonder.
PPS. I’m not an economist (obvious, no?), just that I get tired of seeing decent jobs being shipped to countries using slave labor.
Oh sure! Rich corporations get richer by sending manufacturing to China, and outsourcing services to India and Bangladesh. Meanwhile everything here in the United States gets shut down.
Oh I’m just busting with net welfare gain from all this “free trade”.
Know any other good jokes?
Eleanor Roosevelt walks into a bar with a goat under her arm…