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Big corporate corn farmers celebrate major win, share prices in corn corps. inch higher

Battered by a drought, and hit a second time by the U.S. government's artificial inflation of corn prices, many small livestock farmers were desperately hoping that the Obama administration’s and its appointed leadership at the U.S. Environmental Protection Agency (EPA) would agree to a temporary waiver on blending requirements of ethanol in vehicles.

I. Big Corn Gets a Helping Hand from the Obama Admin.

The EPA on Friday echoed the sentiments of big corn special interests saying it found no evidence that "significant harm" would be caused by not granting a waiver.

The decision came as somewhat of a surprise.  Many sources had expected the Obama administration to instead punt on the issue; the decision to side with the well-heeled special interests to push a program that is unpopular and likely will now cost American jobs was unexpected.

The auto industry has also vigorously opposed the EPA's decision to bump ethanol blending requirements to 15 percent.  They argue that the higher blend will ruin the engines of older vehicles, increasing emissions and forcing consumers to pay for expensive repairs or abandon their vehicles.

Obama bribery wide
Obama and Bush both backed big corn special interests. [Image Source: Politically Incorrect]

The EPA has alleged that it knows the science behind fuel blending better than the engineers who make cars, essentially calling the automakers liars.

The decision will also impact consumers, as ethanol provides less gas mileage in traditional engines that gasoline.  In other words, unless gas stations start charging less at the pump (which seems rather unlikely) consumers will be paying the same amount per gallon, for less equivalent fuel.

Even environmentalists are outraged at the Obama administration, given that ethanol has been shown to not only waste energy, but also increase carbon emissions.  Comments, Michal Rosenoer, biofuels policy campaigner at Friends of the Earth, to The Detroit News:

If the worst U.S. drought in more than 50 years and skyrocketing food prices are not enough to make EPA act, it falls to Congress to provide relief from our senseless federal support for corn ethanol.  The RFS is a broken policy — rather than giving us clean energy, it's incentivizing biofuels like corn ethanol that are exacerbating our economic and environmental problems.

Congress needs to cut corn ethanol from the RFS entirely to protect the economy and the environment from this destructive and dirty fuel.

But despite the united opposition, the Obama administration appears resolute in following its predecessor, the Republican Bush administration, in choosing to side with the big corn special interest groups.

II. EPA to Small Farmers: "Deal With It"

Gina McCarthy, assistant administrator for EPA's Office of Air and Radiation fires back at the critics, commenting, "We recognize that this year's drought has created hardship in some sectors of the economy, particularly for livestock producers.  But our extensive analysis makes clear that congressional requirements for a waiver have not been met and that waiving the RFS will have little, if any, impact."

In other words, the EPA admits it recognizes that farmers are struggling, resorting to desperate measures like feeding their livestock candy waste; but when it comes to bucking a key special interest's agenda the EPA's answer to farmers is basically "tough luck".

Farm drought
EPA claimed to be sympathetic to farmers, but refused to help them with a waiver.
[Image Source: US News]

Over 200 members of Congress, eight state governors, and numerous college professors sign a letter arguing that the blending targets would indeed have a dire impact on farmers.

So who wins?  The biggest winners are the corn and ethanol industry, particularly the growers, who benefit the most from the artificial inflation of corn prices.  Many of these growers are not even family owned, but rather are large corporate farms run by deep-pocketed entities like Archer Daniels Midland Comp. (ADM) and ConAgra Foods, Inc. (CAG).  Indeed, both companies saw a rise in share prices following the EPA's decision.

corn profits
Big corn donates deeply to federal politiicans, who in turn reward it with billions in subsidies.
[Image Source:]

So the word is official -- the U.S. will continue to manipulate prices in the fuel department, despite the cost to consumers, the environment, automakers, livestock farmers, and U.S. jobs.  That's bad news for most -- unless you happen to be an Archer Daniels Midland shareholder.

Source: The Detroit News

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RE: blerg
By mellomonk on 11/19/2012 3:16:17 PM , Rating: 2
Your not going to notice much difference in energy density even at 15%. You can see far more effect by running your tires at improper pressure. The only folks who notice the energy difference is folks running E85 in flex fuel vehicles. But the lower price usually offsets that so it becomes an issue of total range in the end. Well that and mental math. Slightly increased overall milage often comes from the cleaning effect of ethanol on fuel system components. This is relative to how well the fuel system is maintained by the average consumer if ethanol was not present.

In all this discussion hardly anyone has mentioned the primary reason for using ethanol in gasoline. Reductions in emissions and offsetting fossil fuel use. This is why it was implemented in the first place, and those issues are still valid. It is not without it's negative effects, pre 1980 fuel systems can be damaged by it, and it's use combined with some other factors have effected the bushel price and hurt food prices. But in the end remember in the average fill up of E10 you are using 1.5 gallons LESS imported and non-renuable resource. Even factoring in the fossil fuel use producing the corn comes out to a 3% reduction in total fossil fuel use.

There is a debate here given the current drought and food price conditions, but it is being lost in a sea of conspiracy theory and Fox News economics. We are losing sight of the bigger goals and ideas here. Here is a nice primer on the basics.

RE: blerg
By Spuke on 11/19/2012 3:24:12 PM , Rating: 2
and it's use combined with some other factors have effected the bushel price and hurt food prices
So making people starve is a good thing?

RE: blerg
By freedom4556 on 11/19/2012 3:31:57 PM , Rating: 2
The only folks who notice the energy difference is folks running E85 in flex fuel vehicles. But the lower price usually offsets that so it becomes an issue of total range in the end.

No it doesn't; I have run the numbers on this. Around the corner from my office they have just put in a new gas station that carries E85 in addition to the mandated E10. E85 is $.20 per gallon cheaper on the best of days but you go 5-10 mpg less depending on the vehicle. Let's grab the 2013 Equinox as an example (my car isn't flex-fuel). 26mpg on E0 vs 18 on E85 according to the EPA. so you only go 305 miles on a tank instead of 440 but you save all of $5 on a fill-up. You'll have an extra fill up per month if you bought gas every week, so your $20 of savings was just eaten by your extra $55 gas tank. E85 COSTS YOU MONEY!

RE: blerg
By YashBudini on 11/19/2012 3:53:50 PM , Rating: 2
18/26 = .69 This is a reduction of 30%.

Fuel cost would have to be 30% to break even. Your math is way off.

Your 440 miles at 26 mpg = 17 gallons. 305 miles at 18mpg = 17 gallons. A 20 cent difference = $3.40, not $5.00

30% fewer miles means the same amount of e85 you buy monthly would last 21 days, a month is over 4 weeks 11 times per year.

Create flexible pumps. Let me decide how much ethanol I want.

RE: blerg
By freedom4556 on 11/19/2012 4:38:00 PM , Rating: 2
I couldn't remember the exact price of E85 as I'm in the office right now. The other thing to consider is that the 26 mpg was on pure gas because that's what the EPA uses, but the regular unleaded at the pump is E10. The mpg numbers were from the EPA, not my math.

RE: blerg
By YashBudini on 11/19/2012 4:50:46 PM , Rating: 2
OK, but in any case, a 30% reduction in mileage has to be offset by a 30% reduction in price. The current mixes don't come close. And neither will E85.

RE: blerg
By YashBudini on 11/19/2012 4:27:23 PM , Rating: 2
It is not without it's negative effects, pre 1980 fuel systems can be damaged by it

Even if it was acceptable up until now as ethanol percentages increase in a linear fashion the percentage of engine failures will increase in a higher than linear fashion.

You could spin that as economic stimulus, but most people with major engine repair bills won't see it that way.

Don't be surprised if the corn industry acquires Briggs & Stratton along with Tucumseh before the release of E20.

RE: blerg
By freedom4556 on 11/19/2012 4:41:28 PM , Rating: 2
You could spin that as economic stimulus
Anybody remember the parable about the broken window? Destruction is never economic stimulus.

RE: blerg
By PontiusP on 11/19/2012 5:03:17 PM , Rating: 2
Sounds like we got ourselves an EPA shill on here. How much do they pay you?

Here's an environmental question for you. What about the catastrophic environmental disaster known as the "Gulf dead zone" that is due to corn farming runoff? Did that ever factor into the equation?

Also, if this stuff is an energy and cost efficient alternative to oil, then why can't it simply compete in the marketplace on its own? Every time the government has to tell you to buy something you wouldn't ordinarily buy, it's time to be suspicious. And no, this isn't Fox News economics or whatever other condescending term you use. It's simple supply and demand market economics being thwarted and manipulated by government central planning.

Take the blinders off.

"We can't expect users to use common sense. That would eliminate the need for all sorts of legislation, committees, oversight and lawyers." -- Christopher Jennings

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