Monday, November 22, 2010

'U.S. corn ethanol "was not a good policy"-Gore' (ADM; PEIX)

From Reuters:

* U.S. ethanol consumes about 40 pct corn crop
* Impact on food prices "real"

By Gerard Wynn
ATHENS, Nov 22 (Reuters) - Former U.S. vice-president Al Gore said support for corn-based ethanol in the United States was "not a good policy", weeks before tax credits are up for renewal.
U.S. blending tax breaks for ethanol make it profitable for refiners to use the fuel even when it is more expensive than gasoline. The credits are up for renewal on Dec. 31.

Total U.S. ethanol subsidies reached $7.7 billion last year according to the International Energy Industry, which said biofuels worldwide received more subsidies than any other form of renewable energy.
"It is not a good policy to have these massive subsidies for (U.S.) first generation ethanol," said Gore, speaking at a green energy business conference in Athens sponsored by Marfin Popular Bank.
"First generation ethanol I think was a mistake. The energy conversion ratios are at best very small.
"It's hard once such a programme is put in place to deal with the lobbies that keep it going."
He explained his own support for the original programme on his presidential ambitions.

"One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president."...MORE
From our Nov. 15 post "First you Subsidize the Ethanol, then you Export it. (ADM; PEIX)":
"I was also proud to stand up for the ethanol tax exemption when it was under attack in the Congress -- at one point, supplying a tie-breaking vote in the Senate to save it. The more we can make this home-grown fuel a successful, widely-used product, the better-off our farmers and our environment will be." 
-Vice-President Al Gore
Third Annual Farm Journal Conference, December 1, 1998
WASHINGTON, Aug. 3— With a tie-breaking vote by Vice President Al Gore, the Senate upheld today an Environmental Protection Agency rule requiring that ethanol and other renewable fuels get a share of the gasoline additives market.

The Senate voted 51-50 to table an amendment that would have denied financing to the agency to carry out a rule guaranteeing renewable fuels a 15 percent share of the lucrative fuel oxygenate market in 1995. That share rises to 30 percent in following years....
August 4, 1994
Yes Al, some of us remember.
Back in March 2007 we told the story of ADM's lobbying prowess in "Ethanol, Rent-seeking, ADM and God":
In 1995 The Cato Institute put their imprimatur on a paper that said each dollar of Archer Daniels Midland's ethanol profit cost the American taxpayer $30. This wasn't quite fair, as it ascribed all government subsidy costs to ADM's lobbying efforts.

Dwayne Andreas was a prodigious lobbyist. 
This from SourceWatch: "A Watergate-era investigation led to criminal charges that he had illegally contributed $100,000 to Humphrey's 1968 campaign for President, but Andreas was acquitted. And his $25,000 cash donation to President Richard M. Nixon's re-election bid in 1972 became a focus of Watergate inquiry into abuses surrounding unreported campaign money. According to an investigative memo uncovered in 1992 that quotes President Nixon's personal secretary Rosemary Woods, Andreas delivered $100,000 in $100 bills to the White House shortly before the 1972 election."
I've looked at love from both sides now.

Mr. Andreas' motivation was higher than just rent-seeking for ADM, The Washington Post noted in 1985 that "Andreas said he was raised in a religious tradition that called for 'tithing' 10 percent of personal income to the church. And, he adds, 'I consider politics to be just like the church.'"
A back-of-the-envelope calculation shows that the cost to the taxpayer for each dollar of ADM's ethanol profit is down to $2.85. The current round of subsidies are set to expire in 2010.