Is the ethanol boom about to bust?

Yes

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by Rich Sabatini

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Corn ethanol, Congress' answer to our transportation fuel woes, is struggling mightily. This highly-touted flexible fuel of the future is proving to be decidedly inflexible when it comes to alternative energy.

And because of the foolish shortsightedness of Congress, American consumers have been suffering under the burden from high worldwide corn prices that have added to the cost of almost everything including the cost of living,

And woe is Iowa, the state that's the biggest loser in the collapse of the ethanol energy boondoggle. It seems as though the corn belt is about to get belted, and right smack on its economic nose.

Barely a year after Congress enacted a law meant to foster a huge national ethanol enterprise, the goals lawmakers set for that industry are in jeopardy. Plants that make ethanol from corn had been sprouting across the Midwest. But now, with motorists driving less in the economic downturn, these same plants are shutting down virtually everyday.

And is it any surprise? Every time Congress sticks its nose into the laws of the free market, it backfires every time.

Corn ethanol-in a word-is a bust. And so are all the other related energy-producing industries such as wood chips, switchgrasss, and crop waste. But despite all the flowery predictions of the green energy enthusiasts, the U. S. is not about to become the Saudi Arabia of "soil produced" energy.

And for all the greedy investors who rushed in to build ethanol refining plants, it's back to square one.

Only months ago, refiners in some regions were buying up as much corn ethanol as they could to blend with expensive gasoline, effectively keeping pump prices down slightly. But those were the glory days of $4/gallon gasoline; and to the chagrin of the clean fuel lobby- those days might never return.

Since last summer, oil and gasoline prices have plunged while the price of corn, (from which virtually all commercial ethanol in this country is made) has remained relatively high. And so have food prices, which initially rocketed upward after congress' fateful ethanol mandate in 2007.

The alternative energy worshippers are about to discover that ethanol will only be the first to topple from the false gods of clean fuel. From the nation's 150 ethanol providers,10 or more companies have shut down an ominous total of 24 plants in just the last three months.

Most of the nation's largest ethanol producers have suspended production. Many of them are teetering on the brink.

But Congress never seems to learn about the "Law of Unintended Consequences (a cousin of Murphy's law). It cannot be repealed! But predictably, this is not how it was supposed to be back when lawmakers required refiners to blend ethanol into the country's fuel supply.

Congress- in a hapless attempt to create a demand where there was none-had mandated a doubling of corn ethanol use to 15 billion gallons a year by 2015. But it's turned out to be a futile try at reducing the country's foreign oil dependence and lower the greenhouse gases that cause global warming.

Energy experts project that national gasoline consumption between 2009-2010 will be 6 percent or more below the 2007 level; and future ethanol production targets could represent no more than 10 percent of gasoline production. And because congressional regulations had set a 10 percent blend limit for ethanol in most gasoline, there seems to be no other place for ethanol production to go.

But ethanol's downfall may be threatened on another front- in Detroit. Automobile manufacturers say most of their cars are not designed to run on high ethanol concentrations.

Ethan ol (alcohol) is a solvent- this includes fuel lines, and all other rubber-based connectors that go under the hood. So car manufacturers despise it. And while it may burn cleaner than gasoline, the bang for the fuel buck just isn't there. There's no oomph compared to the power you get with gasoline.

It's all about ethanol's lack of combustibility: this means poor mileage, poor ability to start in cold weather, engine knocks on steep hills, pre-ignition, and your basic displeasure from the public used to a 100 year tradition of driving on good ole gasoline.

But this abject failure probably will only encourage Congress to try harder the next time.

"It's possible we may have to look at the targets again," said Senator Jeff Bingaman of New Mexico, the chairman of the Senate Energy and Natural Resources Committee.

Translatio n: "Although we congressional do-gooders were dead-wrong- and have roiled worldwide food prices- we shall NOT be deterred".

And they'll never learn.These coconut heads will not be confused by the hard economic facts of science: refining plant-derived energy (ethanol) requires an equivalent expansion of fossil fuel energy to achieve the end result. It's the scientific equal of chasing your tail- a zero-sum gain.

Producing "advanced" fuels entails breaking down the tough cellulose material abundant in corn cobs, wood chips and other biological waste. And converting it to liquid fuel requires the expansion of more energy than the end product may be worth in today's volatile markets.

Production costs remain high, and solving the technological hurdles for cellulose-based fuels has proven to be an exercise in futility.

But despite all evidence to the contrary, the media will continue to hang by the side of the enviro-crats in Congress, maintaining that "Cellulosic ethanol is something that's less than five years away."

But five years later, we'll be at the point where it'll STILL be five years away.

So then what?

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