No Runny Eggs

The repository of one hard-boiled egg from the south suburbs of Milwaukee, Wisconsin (and the occassional guest-blogger). The ramblings within may or may not offend, shock and awe you, but they are what I (or my guest-bloggers) think.

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Monday Hot Read: WSJ’s “Survival of the Fattest”

by @ 16:18 on July 26, 2010. Filed under Corn-a-hole, Politics - National.

Yes, this one is behind the NewsCorp pay wall, but it is worth either getting the online subscription or grabbing a copy of today’s Wall Street Journal (I’ve done the latter) to read this editorial on corn-a-hole, based on the Congressional Budget Office report on subsidies for biofuels. Both the report and the editorial are devastating, and since I want to include the WSJ’s close, I’ll start with the CBO’s numbers, and expand beyond the corn-based ethanol the WSJ focused on because the rest is even more devastating:

  • The producers of corn-based ethanol get $0.73 per “gallon of gasoline-equivalent” of taxpayer subsidy, producers of cellulosic ethanol get $1.62 per “gallon of gasoline-equivalent” of taxpayer subsidy, and producers of biodiesel get $1.08 per “gallon of diesel-equivalent” of taxpayer subsidy.
  • Those direct subsidies are not the only costs taxpayers bear. Figuring the difference in taxes between traditional fuels and biofuels, as well as the difference between the amount of biofuels produced because of the subsidies and the amount that would be produced without the subsidies, it costs taxpayers $1.78 to replace a gallon of gasoline with corn-based ethanol (or 63.8% of the average cost of gas in Milwaukee as of today), $3.00 to replace a gallon of gasoline with cellulosic ethanol (or 107.5% of the average cost of gas in Milwaukee), and $2.55 to replace a gallon of diesel with biodiesel (or 86.1% of the average cost of diesel in Milwaukee).
  • Not counting the the effects of the conversion of land to biodiesel production, the costs of carbon dioxide reduction are far greater than the $26 per metric ton tax the House passed as part of its cap-and-tax proposal: roughly $750 per ton for corn-based ethanol, $275 per ton for cellulosic ethanol and $300 per ton for biodiesel.

I can’t write a close that’s better than the one the WSJ editorial writers did, so I’ll borrow their close (emphasis in the original):

Given these realities, the only mystery is how an industry that produces a fuel that no one would willingly buy has managed to be subsidized over four decades at costs that are higher than anyone ever imagined. But then, maybe it merely illustrates the theory of the politically fittest.

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