Archive for March 27th, 2011

Ethanol Changes Tactics

The ethanol industry is changing tactics to keep those universally unpopular subsidies coming.

Today’s ethanol industry can prosper without government incentives, the founder of Green Plains Renewable Energy Inc. said Thursday.

Ethanol has become an integral part of the country’s energy picture, in demand not only from motorists but also from oil refiners who use it to boost the octane of the gasoline they produce, said Todd Becker, president and CEO of Omaha-based Green Plains.

The economics of the fuel industry, combined with new production technology, make ethanol 40 cents a gallon cheaper than gasoline, on average, Becker said. That gives ethanol producers like Green Plains a cost advantage that will outlast the government’s 45 cents-a-gallon tax credit for ethanol-blending companies.

The blenders’ tax credit eventually will end, he said, but should be followed temporarily by incentives that would increase demand for ethanol. Those incentives would encourage gas stations to install equipment to sell high-ethanol fuel and the auto industry to make and sell vehicles that use high-ethanol fuel.

If Mr. Becker thinks ethanol is profitable, then he should be able to borrow against those earnings to build the delivery infrastructure himself.  If gas stations think that ethanol is profitable, they should be able to finance the dispensing equipment.  If I think ethanol is profitable, I’ll lend it to them.

But if they can only make all this happen with government subsidies, then maybe it isn’t really all that profitable after all, and directing resources to it is just more of the massive misdirection of resources that has been part and parcel of trying to grow fuel rather than drill, mine, or capture it.


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