December 8, 2008

Jenkins: Ethanol most successful alternative energy project ever

Jim Jenkins, chair of the Nebraska Ethanol Board, spent some time with Brownfield over the weekend to discuss ethanol, food prices, ethanol subsidies and more.

He noted that ethanol is one of the most successful alternative energy projects ever launched - and has taken a 6 percent market share away from oil. That's keeping jobs and money in the U.S. He also reported that Nebraska has a $3 billion ethanol business - and is one of the best economic engines rural America has ever seen.

Although a shakeout and reorganization is and will continue happening within the ethanol industry, Jenkins said some producers are currently in the black - and that a vast majority of plants will make it through. (He makes a few predictions near the end of the report.)

To listen to the report, click here.


  1. Successful?! Well, I guess if the government throws enough taxpayer money at an industry, AND guarantees that industry a minimum sales volume for its product, once can look at the outcome and call it "success". But that success has come at the cost of diverting taxes from better uses, increasing feed costs for livestock producers, and increasing the costs of grains and oilseeds everywhere. Somce success.

  2. Actually, ethanol production is tax positive - it generates more in taxes than the government "pays" via the blenders tax credit ( Corn prices across Nebraska are below $3, well below in some cases, so I'm not sure it is possible to attribute the spike in corn prices earlier this year to ethanol. I don't consider $3 corn we see now a "high" price.

    Global grain prices have fallen just as dramatically as domestic prices - but not because the biofuels spigot has been turned off. Market speculators have disappeared, oil prices are much lower (an important thing to remember), global production is up, countries have ended temporary measures that blocked trade, etc.

    The U.S. Renewable Fuels Standard is critical if we ever hope to fully diversify our energy sources and reduce oil imports. The RFS helps us from repeating the 1970s - from going backwards. Assuming oil will stay at $40 or $50 forever would be a mistake.

  3. You mention that ethanol production generates more in taxes than the government pays via the blenders tax credit, as if that is something astonishing. Most people and companies generate more in taxes than they receive in direct subsidies -- LOTS more, because most do not receive subsidies in the first place.

    No, $3 is not a particularly high price for corn. But that its price has dropped is hardly evidence that the market was not reacting -- rationally -- to the fear of insufficient supplies this spring, before the rains finally broke. The industry dodged a bullet, but just barely. The government is playing Russian roulette with the nation's and the world's grain supplies.

    There are far less distorting, and cheaper, policies than mandating biofuels to prevent sliding back to earlier levels of oil dependency. Try increasing the price of gasoline through a higher tax, for one -- as does Australia, Japan and all of Europe. Use part of the revenues to reduce income taxes on the poor and the middle class.