Time for bold action on biofuels
President Obama’s re-election paves the way for him to actually pursue the “all of the above” energy strategy he has promised. After a series of government-backed green tech companies collapsed, the Obama team smartly shifted away from its renewables-only myopia and — at least rhetorically — adopted a broader energy approach more friendly to traditional oil and natural gas.
Next year, the president should back up that promise with bold action. As a first move, he should propose reform to the nation’s biofuels policy.
Already this year, a bipartisan group of eight governors and a coalition of the nation’s livestock industry requested that the biofuels mandate be waived. The conflict between drought year corn harvests and a growing ethanol industry are creating a food versus fuel crisis. The Obama Administration denied that waiver request.
The biofuel hysteria, however, started back with President George W. Bush. In 2007, he signed the Energy Independence and Security Act, establishing a national “renewable fuel standard” requiring domestic refineries to mix a certain volume of biofuels every year.
For 2013, that volume is 16.55 billion gallons. That amount is set to increase substantially next year, and every year until 2022, when the goal is 36 billion gallons of biofuels, more than 25 percent of our current total fuel use.
This goal is unattainable under the current system. Corn supplies for conventional ethanol are stretched to the limit, especially given this year’s drought. And given weather patterns and aftereffects of this record drought, next year is not assured to be any better.
Domestic corn production hasn’t kept up with the sharp uptick in demand. In fact, since government started dictating ethanol use, the amount of corn used to manufacture fuel has jumped 382 percent. Production has not kept pace. Corn production has only increased 5.4 percent since ethanol mandates were instituted. Fully 40 percent of our nation’s corn supply goes to ethanol. More corn goes to making ethanol than feeding livestock.
When demand outstretches supply, the price of corn and corn-dependent foods jumps — dramatically. Poultry prices are 3.4 percent higher this year compared to 2011. Milk and dairy prices are up 9.1 percent, pork 7.5 percent and hamburger 10.4 percent.
Then there is the situation with so-called cellulosic ethanol. By 2022, the RFS requires the use of 16 billion gallons of ethanol made from non-food source feedstocks, such as switchgrass, wood fiber and other materials. This goal is also unattainable.
Distilling cellulosic ethanol is vastly more complex than producing corn ethanol and is not yet commercially viable. Over the last three years, the RFS has mandated 850 million gallons of cellulosic ethanol, yet the U.S. Environmental Protection Agency has had to waive that mandate each of those years. To date, only 20,000 gallons have been produced, despite hundreds of millions of dollars spent in federal grants, loan guarantees, incentives and a whole suite of potential subsidies awaiting any commercial breakthrough. This inconvenient truth has yet to be addressed.
For his second term, President Obama should discontinue this misguided policy of pouring massive amounts of federal dollars into an unpopular and economically destructive fuel product. Ethanol supports and mandates should be scaled back.
There are much smarter ways of boosting domestic energy production that can also find support on both sides of the political aisle. Crude oil production in this country is up 11 percent since 2006. Private firms are still finding new, massive oil reserves right under our feet. Notably, there’s the 8-billion-barrel-strong Bakken Shale in North Dakota, the recent development of which has created a state-level job glut and driven unprecedented economic growth.
We should further develop oil and natural gas deposits here at home. Doing so won’t require any artificial government supports or regulatory favoritism. And it will create jobs and drive down energy prices while avoiding the adverse unintended consequences of overreaching biofuel mandates. The volumes of biofuels that can stand on their own economically will add to the vitality of the energy sector.
Politically, there should be room for such a move. On election day, voters sent a clear signal that they want Congress and the president to work together to both create jobs and cut down on excessive government spending. Scaling back biofuel supports and expanding domestic energy production does both, and helps the president achieve his “all of the above” energy strategy.
- Dave Juday
Commodity market analyst and principal of The Juday Group
Thoughts about school shootings
The recent school shooting in Newtown, Conn., has taken us to a new level of disbelief at the random terror occurring in America. We realize with this incident that no one is safe, and it’s as close as our schools, our churches, our malls, or our town. The further horror of this event was that children were slaughtered by a 20-year-old human being, with no respect for human life. He riddled 20 children so full of bullets that no one had less than 3 bullets rip their bodies apart, and according to the news, some had 11 bullets that had passed through them.
As the media profiles this particular shooter, we find out he is called:
• really intelligent
• stayed inside on his computer
• had some mental issues
Does that give you some solace? Do you feel like, “Oh well, then I guess something like this would have been inevitable.” Eventually he would be expected to “act out” in some fashion.
We now see politicians and newscasters demanding that something be done. They’ve picked areas for solutions, like gun control legislation, better mental health programs and better monitoring of drug prescriptions for the emerging bi-polar generation. None of these will solve the complex issues that end up in these school shootings (but they might help in some way?). At least people will think that something is being done as activity increases in these areas.
But, people blame God for letting these shootings happen, while forgetting that Satan is running free on this planet for now. As America moves farther and farther away from God, they actually open the door for Satan to have his way. So what if we say these issues are the bigger causes of school shootings:
• No moral values
• Family breakdown
• Not letting children ‘grow up’
• Blaming others – no personal responsibility
This boy (not a man at 20) was living in a broken family situation, with his mother, and she was out looking for jobs for him (a man would look for his own job). They went to the firing range together, but did they ever go to church together?
- Jim Moore