(H/T for reason #1 – Jib) –
Reuters is reporting that despite a hefty tariff on foreign ethanol of 2.5% plus 54 cents per gallon, the Energy Information Administration is expecting that the US will import more ethanol this year (no solid numbers on the current amount of imports though, which makes a hard comparison a bit tough). They attribute it to oil companies switching from MTBE to ethanol as an additive, and expect the East Coast and parts of Texas to face tight gasoline supplies and higher prices.
Now, let’s run through some numbers. From the article, the US produces about 275,000 barrels of ethanol per day and imports an unknown amount of ethanol. If MTBE is fully-replaced by corn-a-hole, that will require roughly another 130,000 barrels of ethanol per day according to the EIA. Guess what? Every drop of that additional 130,000 barrels/day will have to come from foreign countries for the foreseeable. Fortunately, Brazil has a heavily-government-subsidized excess, and they have a friendly government unless and until Hugo Chavez manages to get his meat-hooks into them. The bad news; those tariffs apply to Brazilian ethanol, and there isn’t any political will to reduce them.
Remember, it’s not a shortage of corn that’s causing the US shortage of corn-a-hole, but a shortage of corn-a-hole production capacity (side note – Gee, where have I seen this before? The oil and natural gas markets ring alarm bells.). The corn’s going to be grown one way or the other, so an increase in corn-a-hole production will not cause the farmers to see any significantly-more (if any more) money. So, where’s the additional money that will be spent on corn-a-hole fuel going? ADM, a pittance to Brazil as long as we import ethanol, a massive tax windfall to the feds (who will simply spend said windfall) as long as we import ethanol, and ExxonMobil if we ramp up domestic production (remember, it takes more oil to create and use the amount of corn-a-hole required for E10 than is replaced by that amount of corn-a-hole).
