Frankly the CAFE and Renewable Electricity Standard are far more important.

If we need some pork to get those through, I'm fine with that.

-David Ahlport

Any subsequent Congress would have to act swiftly, since according to the Renewable Fuels Association, once current new plants and expansions under construction come on stream, there will already be the capacity within the United States to produce 13.47 billion gallons of ethanol a year, and according to the National Biodiesel Board:

There are currently 165 companies that have invested millions of dollars into the development of biodiesel manufacturing plants and are actively marketing biodiesel. The annual production capacity from these plants is 1.85 billion gallons per year.

Eighty companies have reported that their plants are currently under construction and are scheduled to be completed within the next 18 months. An additional four plants are expanding their existing operations. Their combined capacity, if realized, would result in another 1.37 billion gallons per year of biodiesel production.

Thus, the combined capacity to produce ethanol and biodiesel in the United States will very soon exceed 15 billion gallons a year. If the U.S. Congress doubles the RFS to 15 billion gallons a year, and then rescinds it, companies will scream that they have invested good money on the assumption that the RFS would rise (and stay there forever, if not be raised again), and demand compensation.

That is why I maintain that a mandate is the most costly of all policies. Once in place, it is very, very hard to move in any direction except up.

These are only my personal opinions.

To do this like the House did it and allow no one time to read the entire bill and then debate it on the floor is just lousy legislating.  This just gives the lobbyists free reign.  

These comprehensive packages allow too much crap to get through while attempting to pass the better stuff.  

Better to take more time and get it right.  

Roscoe opposes the RFS because it has stimulated demand for corn and increased corn prices (thus leading to less need for subsidies!) so that his poultry CAFO and dairy factory farms are now paying more for feed. boo hoo. and Twinkies and Pepsi are more expensive with higher HFCS.

A new study by Tufts University shows that the factory farm industries saved $35 BILLION since 1997 because of access to cheap below-cost corn.

http://www.ase.tufts.edu/gdae/policy_research/BroilerGain ...

Meanwhile, low corn prices meant taxpayers had to bail out farmers with subsidies.

So you can't have it both ways enviros. Bash farmers for taking subsidies for growing all that cheap corn, then side with Agribusiness like Tyson and Smithfield and the Grocery Manufacturers for bitching about expensive corn and "higher food prices." Family farmers want to work with enviros in addressing the problems of agrofuels (of which there are MANY!!) but quoting folks like Roscoe who are simply parroting factory farms line will not help you.

David (and GreyFlcn), you owe it to your readers to explain how a Renewable Fuels Standard, especially one for 2015 "will get ratcheted back by a subsequent Congress" -- at least not without massive pay-outs to the industry.

Most likely it won't.
But as I mentioned, the pork is well worth it if it means we get an RES and CAFE hike.

http://greyfalcon.net/oilvsethanol2.png
http://greyfalcon.net/oilvsethanol.png


-David Ahlport

15% of the United States electricity from renewables, and 40% increase in well worth the Pork.

-David Ahlport

Then it's not worth the Pork involved.

http://gristmill.grist.org/story/2007/12/07/1025/4672

-David Ahlport

I attempted in earlier posts to bring the issue of potential shortfalls in corn production to the ethanol policy debate.    

How much corn would be consumed by 15 billion gallons of ethanol?
15 billion/2.65 gallons per bushel =           5.66 billion bushels of corn!

How does this compare with yearly production in the US?
from: National Agricultural Statistics Service
http://www.nass.usda.gov/QuickStats/index2.jsp

Year Acres       YLD  Production
2007 93,616,000  153  13.2 billion bu.  
2006 78,327,000  149  10.5 billion bu.
2005 81,779,000  148  11.1 billion bu.
2004 80,929,000  160  11.8 billion bu.
2003 78,603,000  142  10.1 billion bu.
2002 78,894,000  129   9.0 billion bu.

As you can see 5.66 billion bushels exceeds over 50% of US corn production in four out of the last
six years and over 40% of the 2007 crop!

You can also see that in 2007 corn acreage increased significantly.  How long can this increased production be sustained and at what cost?  

What are the market and economic implications of adding such a large demand from ethanol on the US and world economies and food supplies?

A projection produced by University of IL ag economists last spring is quite revealing.  I am excerpting some relevant passages from their study but I encourage you to read the entire report:  
2007 U.S CORN PRODUCTION RISKS: WHAT DOES HISTORY TEACH US?
http://www.farmdoc.uiuc.edu/marketing/mobr/mobr_07-01/mob ...

A crop 20 percent smaller than expected would magnify the need for rationing outlined under the previous scenario. A crop of 9.832 billion bushels and year ending stocks of 414 million (4 percent of use) would allow consumption of only 10.37 billion bushels, 17.4 percent (2.18 billion bushels) less than consumption with a crop of 12.29 billion bushels. Compared to the scenario of expected production, use by category is forecast to decline as follows:

Feed------down 22.6 percent

Exports--down 20 percent

Ethanol---down 10 percent

Other -----down 10 percent

As in the previous scenario, consumption by category could deviate substantially from these projections, but total consumption would be limited by available supplies. A period of extremely high prices would be required in order to force such a large reduction in use. To reduce corn use for ethanol production, for example, corn prices would have to be high enough so that the most inefficient plants were unable to recoup variable costs of ethanol production. With ethanol prices near $2.20 per gallon, that price could be near $6.00. The average farm price for the year would likely exceed $5.00 per bushel and is forecast at $5.25. The high prices would force a substantial reduction in livestock numbers, increasing meat supplies in the short run, but resulting in much smaller supplies after that. Meat production could eventually decline 10 to 15 percent, resulting in escalating retail meat prices. The high prices would have significant negative financial implications for livestock producers, forcing some to discontinue production entirely.

The historical pattern of the difference between actual and expected production suggests that the odds of a shortfall of 10 percent or more is not trivial. Shortfalls exceeding 10 percent occurred, on average, about once in five years since 1970. Shortfalls exceeding 20 percent of expected production would require significant rationing and very high prices, with potentially very negative implications for some users of corn. Shortfalls of that magnitude have occurred, on average, about once in 12 years since 1970.

An important public policy question, then, is, with an extreme shortfall in production, would the market be allowed to allocate the crop among users or would such a shortfall in corn production induce government intervention? The norm from past experience with rationing has been to allow the market to allocate the crop, with the largest adjustments taking place in the livestock sector. However, there has been one exception. Short supplies and high soybean prices in 1973 resulted in an embargo on U.S. exports. Such an embargo on corn exports might be considered following a large shortfall in production, but the potential negative impact on longer-term trade relationships would make an embargo a very unpopular alternative. The financial implications of high corn prices for livestock producers might evoke intervention in the allocation of supplies between domestic livestock producers and processors of corn.

The current situation in the corn market may have other policy implications. Corn prices are expected to remain generally high and extremely volatile for an extended period of time. The combination of a low level of stocks and an increasing portion of corn consumption occurring in the ethanol sector, where demand is relatively price insensitive, suggests that prices will be extremely responsive to small changes in U.S. and world production prospects or changes in demand for corn in any other sector. Prices of other commodities will also be influenced as the market attempts to allocate production resources, primarily land, among the various crops. Provisions of the new "farm bill" are expected to reflect this changing environment of high and volatile crop prices. In addition, careful consideration of potential market impact should be given to policies encouraging additional bio-fuels production. Other considerations might include provision for a corn reserve in years of large production to provide a buffer for a future shortfall in production.

The questions remain:  
Do all the potential risks involved in ramping up corn ethanol production outweigh the projected marginal reductions in oil usage?  
And are our policy makers in Washington using biofuels to substitute for the really meaningful things we need to be doing to reduce our total oil consumption?  

We had better plan our needed sacrifices instead of blundering into them with really lousy legislating.  

Please read my earlier comments, "Implications of 15 billion gallons of corn ethanol".

When you read the excerpts from the University of IL study, '2007 Corn Production Risks, What does History Teach Us?', please consider that when this study was published last May, corn ethanol was due to consume only about 20 to 20% of the US corn crop this year.

So, when 15 billion gallons of ethanol proposed in the RFS bill consumes 50% or more of the US corn crop, HOLD ON!

I sent a copy of my previous post to Sen. Durbin and Sen. Obama and to one of the energy reporters at the New York Times.  This is important stuff that the public really has no grasp of other than their feeling of higher food prices this year as a result of the demand already created by ethanol production (which ethanol tried to blame on oil).  When two very well respected agricultural economists start talking about rationing and the potential of future embargoes on exports, the public really needs to be better informed about the potential risks.  So far they have been largely kept in the dark by the lack of good media coverage and ethanol industry' propaganda.  

It is time the public gets the big picture and Congress gets focused on the real world rather than the number of Midwest votes!

Thank you for reading.

Lou