Thursday, March 21

NY Times: Ending ethanol subsidy is causing misery, so...

I get such a kick out of the NY Times. Never can decide whether their reporters and editors are really as clueless about the world outside NYC as they seem, or if the seemingly clueless articles they run every couple of days are really just paid advocacy pieces.

Case in point: A story that ran just five days ago titled "Days of Promise Fade for Ethanol." The story's 'hook' was how the closing of "nearly 10 percent" of the nation's ethanol plants--located, of course, in midwestern farm states--has hurt people in those towns.

Of course that's extremely sad for the folks who lost their jobs in those plants--just as it is for Americans who lose their jobs due to a powerplant or mine being forced to close by the administration's war on coal. But you won't see any articles in the Times about how hard *that* is on Americans--because it doesn't fit the narrative.

But ethanol--now *there's* an idea Leftists can love: In theory it could eventually replace that dirty, nasty *oil* industry (shudder!).  Also, it requires huge government subsidies and mandates in order to work.  If you're a Leftist, what's not to love?

Well for one thing the federal mandate for ethanol use, and subsidy for same, caused the price of corn (the main input) to skyrocket (which I realize is good for farmers--and I'm delighted for their good fortune, seriously). This was because the government-mandated, taxpayer-funded subsidy artificially increased the profitability of making ethanol, which in turn gave operators of ethanol plants an artificial incentive to bid more for corn.

Not only was this a completely normal and expected outcome of subsidizing and mandating ethanol, but independent economists explicitly warned congress that this would happen. But not surprisingly congresswhores listened instead to their Left/Green supporters--who saw ethanol as something that could eventually replace oil--and to the huge contributions given to them by big corn marketers like Archer Daniels Midland.

Gee, what a surprise.

And how much were taxpayers subsidizing ethanol? According to Walter Russell Meade, in 2010 it was over $6.6 billion. The 45-cent-per-gallon subsidy ended at the end of 2011, but the government is still propping up the price by forcing gasoline producers to blend X billion gallons of the stuff into gasoline--and will fine them astronomical sums if they don't. So the market distortion is still there.

The Times--always sooo sympathetic to the plight of ordinary Americans in flyover country--takes pains to explain the devastating effects ending the ethanol subsidy have had on residents of the small towns that have ethanol plants:
Not only do the plants employ residents of these small communities, but they also provide a market for farmers to sell their crops and buy grain to feed their livestock. They attract a steady flow of trucks whose drivers use truck stops and patronize other local businesses. Contractors visiting the plants stay in local hotels. And the plants hold large accounts with local banks.
Didja get that? The plants actually provide a thing called a "market" where farmers can go and sell their crops! That is so...innovative! And the plants attract trucks whose drivers "use truck stops" (amazing!) and spend money in the local economy! Will the wonders never cease?

And to think this only costs taxpayers six or seven Billion bucks a year! Why, it's as successful as Lord Obama's "Stimulus" program!

Oh, and lest you think the Times reporter is out of touch with the common man, consider this:  Have you been thinking the price of gasoline was rising rather dramatically? Not so, citizen! Read for yourself:
The value of ethanol has also sagged. Its price is created in part by the price of the gasoline it displaces, and gasoline prices have been relatively modest for the past few months.
Maybe they're "modest" in Manhattan--where most of the residents don't even own a car--but out here in flyover country we were paying damn near four bucks a gallon a few weeks ago.

And didja get the line about "[ethanol's] price is created in part by the price of the gasoline it displaces"? Cute--it's "created" by a federal law that forces refiners to use a certain amount of the stuff regardless of how much it costs. Thus the price is "created" by government mandate, and realistically has nothing whatsoever to do with the price of oil-based gasoline.

But I suspect at least a few people at the Times know this.

Can't decide whether this article was simply paid for by Archer Daniels Midland, or whether reporters John Eligon and Matthew Wald are really as clueless as they sound. When the NYTimes starts bemoaning the hardships of folks in flyover country it's not unreasonable to think there's an agenda being floated.

And also time to keep a hand on your wallet.


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