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Reduced corn production makes increased ethanol content in fuel worrisome

A new report has been published that looks at the tense negotiations between the White House and automakers over CAFE standards that would push fuel efficiency to 54.5 mpg by 2025. According to the report put together by the House Oversight and Government Reform Committee, the Obama administration "openly played automakers off of each other to gain a tactical advantage over the industry." 
"The inevitable product of this reckless process was a pair of rulemakings that reflect ideology over science and politics over process. … Americans will be forced to drive expensive, unpopular and unsafe automobiles mandated by the Obama administration," stated the report.
However, representative Elijah Cummings (D-Maryland), rejected the report stating, "Any allegations that the White House is seeking to weaken the auto industry are simply ridiculous — this is the White House that saved the auto industry from its near-collapse."

"Japan is angry. Feel like they have been screwed." -- Toyota
The report also features notes from auto manufacturers involved in the negotiation process with Washington. The notes show that foreign automakers particularly were unhappy with the process and felt that the rules were jilted in favor of Detroit automakers. Despite misgivings, most foreign automakers agreed to the deal. Handwritten notes in the report from Toyota stated, "Japan is angry. Feel like they have been screwed."
Automakers maintain that the new requirements would add about $2,000 to the cost of the average vehicle by 2025 or roughly $3,000 when costs from the 2012 to 2013 fuel efficiency rules are figured in. Automakers felt pressure to agree to the Obama administration's fuel economy standards over fears that California would enact even stiffer efficiency ratings if they turned Washington down.
While fuel-efficiency standards are set to increase in the coming years, the White House is working hard to get more ethanol into the nation's fuel supply to help reduce the need for foreign oil. However, the U.S. is currently in the middle of a corn shortage. Ethanol in the U.S. is primarily produced using corn. Corn production in the U.S. has fallen drastically due to drought, and livestock producers fear that increasing the ethanol content in gasoline will result in even less corn being available feed, therefore, raising prices of feed and food supplies.

Severe drought conditions have obliterated this year's corn crop [Image Source: MSNBC]
The Detroit News reports that over 180 members of Congress are calling on the Obama administration to waive increased ethanol requirements in fuel. White House spokesman Jay Carney said, "The EPA has made clear that they're working closely with the Department of Agriculture to keep an eye on yields, and they will evaluate all the relevant information when assessing that situation."
EPA spokeswoman Alisha Johnson said, "We are in close contact with USDA as they and we keep an eye on crop yield estimates, and we will review any data or information submitted by stakeholders, industry and states relating to the RFS program."

Sources: The Detroit News [1], [2]

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By nolisi on 8/14/2012 1:10:20 PM , Rating: 2
I'm not going to respond to everything because A) you do make some decent points, and there's no need to extend the debate it by arguing minutiae and B)you keep either missing key points in what I'm saying, or make glaring errors - which is what I'll focus on.

Yes, but capitalism is the nearly undisputed king of economics, now and since the forerunners of Adam Smith, because on the average free market actors do a less bad job then government hacks.

For the most part yes- but in invoking Smiths name, I'm forced to remind you of a few things:
1) he warned against giving the market too much power
2) he advocated government protection of the poor
3) he advocated progressive taxation

The sub-prime market essentially did not exist until the government mandated its opening via acts like the Community Reinvestment Act, which forced banks to lend to the poor.

Complete and utter bull- this is a complete rewrite of what the CRA did (I've heard this before). The CRA did mandate loans in poor communities- but it did NOT force banks to make risky loan options available to unqualified borrowers, or loan out more money than borrowers could afford.

First- it's ridiculous to think that an act created in 1977, and whose provisions were weakened in the subsequent 30 years had this kind of an impact.

Secondly- most banks that made sub-prime mortgages available were NOT subject to the CRA:

Banks willingly went for subprime loans to open up new markets and enhance profit potential, period. Most opinions otherwise ignore the crucial fact that CRA backed loans had historically low levels of default to begin with, and most subprime loans that the did default were outside of CRA regulation.

I even heard the argument that the relaxed standards of the CRA eventually "spread to the rest of the market."

Again- the market choose to go the direction of least resistance, the government didn't force them to. Markets typically go for LCD because it's cheap and fast, not because it's safe and economically viable long term (the essential problem with being completely profit driven).

How is that an excuse for violating property rights? make the actions of the left somehow excusable.

It's not an excuse. But if you're looking for one- they asked for help. Or did you forget that part? Maybe you'll suggest that government forced them to take bailouts? They did have another option.

Ah! I see. Blame the moral failures on the other guy.

As for this- I'm not suggesting that we blame one guy or the other (you're actually the one suggesting that). I actually acknowledge that both sides of the equation are to blame in cases of corruption. But by focusing the blame on "government corruption" you (and others) completely dismiss the idea that the market are some how culpable in the process as well.

And secondly- my rudimentary (sarcasm) knowledge of problem solving suggests that you solve the root of the problem. The root of the problem is the market players profit motive- that's what makes the bribes possible in the first place.

Lastly- while the official may be a part of the government- many of our governmental officials came from the market in the first place. Where do you think the influence is going to come from?

“We do believe we have a moral responsibility to keep porn off the iPhone.” -- Steve Jobs

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