The ethanol strategy

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  • RedShirt USS Enterprise, UT
    Aug. 14, 2013 7:53 a.m.

    To "SG in SLC" and if you look at those tax breaks that they receive, it is no different than for anybody else. What that NYT article forgets to mention is the simple fact that in addition to taxes paid for equipment investment the oil companies pay another 16% of the value of the oil they find in royalties, plus they pay the government lots of money for land leases.

    The 9% paid on capital investment is actually good, because for many industries they can write off 100% of the lease costs on their taxes or else they can get large tax breaks for buying equipment.

    Another thing that was omitted is the simple fact that by the time the oil get out of the ground and into your car, the oil company has made less than 10% profits. In comparison, Ford has a 13% profit margin, Apple Computers runs a 23% profit margin.

    So, what is the problem with oil? They pay high taxes, royalties, and leases.

    To "LDS Liberal" Texas is in a huge drought, that is cutting the water supplies. 80% of the water used in Fracking is recycled.

  • LDS Liberal Farmington, UT
    Aug. 13, 2013 5:24 p.m.

    Gotta love it.

    Food is being used for fuel,
    Water is being used for fracking [fuel].
    (read today that wells for drinking water in towns in Texas are running dry due to fracking).

    Conservative Americans would rather give up their food AND water,
    than their gas-guzzling trucks and SUVs.


  • J Thompson SPRINGVILLE, UT
    Aug. 13, 2013 5:10 p.m.

    @ SG,

    Congress legislates, even when the State is Iowa. Congress, not any special interest group, writes the laws. You make it sound like Congress is just a puppet for a special interest group. Is that your argument? Is Congress just a puppet for same-sex advocates? Is Congress just a puppet for Obama's favorite union? Is Congress to blame or is a bunch of farmers to blame for the legislation? Please show us which farmer submitted a bill to Congress that was passed by Congress and then signed by the President.

    You claim that because the oil leases are not taxed high enough that the federal government is "subsidizing" those companies. Why should the federal government tax those leases at all? The government charges each of us a federal tax on each gallon of fuel that we buy. Why do you think that the government should also tax the extraction of oil from the ground? Do they tax other companies just for the right to do business in America or do they tax companies on their profits?

  • SG in SLC Salt Lake City, UT
    Aug. 13, 2013 4:53 p.m.

    @ Mike Richards & Redshirt1701

    Your argument against mcdugall's point is either simplistic or disingenuous.

    No, farmers don't write legislation (unless they are elected to Congress), but they wield a disproportionate amount of influence via the Iowa Caucus, and via pressure from the congressional delegations and agribusinesses of Iowa, Kansas, Nebraska, and corn-growing districts in other states to "take the pledge" and support subsidies for corn ethanol fuel production.

    With regard to petroleum industry subsidies, the following are from the New York Times (July 3, 2010):

    "An examination of the American tax code indicates that oil production is among the most heavily subsidized businesses, with tax breaks available at virtually every stage of the exploration and extraction process."

    "Oil field leases and drilling equipment are taxed at an effective rate of 9 percent, significantly lower than the overall rate of 25 percent for businesses in general and lower than virtually any other industry."

    "For many small and midsize oil companies, the tax on capital investments is so low that it is more than eliminated by various credits. These companies’ returns on those investments are often higher after taxes than before."

  • DaveT Bountiful, UT
    Aug. 13, 2013 4:02 p.m.

    The one consequence of using ethanol for fuel not addressed in this article is the extreme impact on food availability and price. Where corn (maize)is the major source crop, the diversion of this crop from food to fuel has had an enormous impact on price and availability of this staple crop, particularly in poorer areas. Because US-grown corn is an essential staple in much of the world, diversion of these crops impacts those who are least able to adjust. Look back on the back-page headlines about food riots in Mexico and elsewhere for evidence, but the advocates of political appearance over meaningful action will not admit it.

  • Z South Jordan, UT
    Aug. 13, 2013 12:16 p.m.

    @airnaut, the price for gasoline in Germany (and the rest of Europe) is $7 a gallon because of high European taxes on refined oil products, not because WE have a government subsidy on oil in the United States. The tax structure in Europe has moved most refining operations to other countries, especially the Americas.

  • Redshirt1701 Deep Space 9, Ut
    Aug. 13, 2013 12:11 p.m.

    To "Baron Scarpia" and "airnaut" what subsidies do the oil companies get? Right now they are some of the largest corporate tax payers. In addition to all of the corporate taxes they also pay massive royalties to the Federal Government along with state and local governments. Any tax break they get right now is not much different than what a person gets for opening a McDonalds restaurant.

    So tell us, what subsidies do oil companies get?

    If we are going to make this equal, lets strip the subsides to the farmers who grow the corn and srip the subsidies from the ethanol producers.

    To "micawber" there was a study put out there a few years ago showing that over its lifetime, dust to dust, a Jeep Wrangler was more environmentally friendly than a Prius.

  • Mike Richards South Jordan, Utah
    Aug. 13, 2013 11:25 a.m.


    Sorry, but I disagree. Those farmers cannot write legislation. Those farmers cannot sign legislation. Those farmers cannot see that signed legislation is acted upon. All they can do is to suggest something.

    Everyday in America, Congress received thousands of requests from citizens for assistance. Congress acts on a very small number of requests. Congress writes the law. The President enforces the law. Farmers do neither. They are no more responsible for what the Federal Government does than you or I.

    Passing the "blame" on someone other than Congress is often done, but it is just another way that people use to vilify those whose ideas are different than their own.

    If you have a problem with ethanol being required, the persons to contact is your Representative and your Senators. They are the only people who can write legislation.

  • mcdugall Murray, UT
    Aug. 13, 2013 10:28 a.m.

    @Mike Richards. The government was not the one who came up with the ethanol idea, it was Big Agra in the Mid-West who pushed ethanol. The Government was the tool to solidify a private industry business plan that was not going to succeed without government involvement. Private Industry and the Government share equal responsibility.

  • micawber Centerville, UT
    Aug. 13, 2013 10:27 a.m.

    I have never heard that about fuel-cell cars.
    Some have said that hybrid vehicles have a negative environmental impact. But I think the evidence is pretty clear now that, on balance, hybrid cars are much better for the environment than conventional cars.

  • Mike Richards South Jordan, Utah
    Aug. 13, 2013 10:12 a.m.

    Please list the subsidies that the Federal Government is giving to "big oil". It would be interesting to compare those "subsidies" with the subsidies paid to farmers, to defense contractors, to solar energy companies, to windmill manufacturers and to unions to save their pensions.

  • CG Orem, UT
    Aug. 13, 2013 9:42 a.m.

    I've heard that the negative environmental impact of producing fuel-cell cars is much greater than standard gasoline-powered cars.

  • airnaut Everett, 00
    Aug. 13, 2013 9:19 a.m.

    The Germans and Japanese build cars getting 50+ mpg,
    because gasoline is over $7 a gallon there.

    Americans drive trucks and SUVs that get 12 mpg -- 4 times as much to do the same task.

    We could have 4 times the amount of fuel needed to live our lives today,
    IF Americans paid the honest Global market price for gasoline -- and NOT the Oil Company's Government subsidized price.

    Drop the Oil Company subsides, and let the free market drive more fuel efficient vehicles.

    BTW - Alternative energy vehicles will become more and more cost competitive if Big Oil wasn't getting subsidized.

  • Mike Richards South Jordan, Utah
    Aug. 13, 2013 9:12 a.m.

    The Deseret News pointed out the problem with using ethanol.

    Any time the government decides what is best for America, the people suffer. Farmers who once produced food for human consumption took advantage of government credits to produce crops for fuel. Food prices went up. Gas prices went up. Less money was available for travel. The government lost billions in fuel taxes because people bought less fuel. Only the farmer received a temporary benefit.

    If the market were allowed to work without government interference, alternatives to gas would come to the market and everyone would benefit.

    If the "know-it-alls" in government were fired, the cost of government would decrease and America would benefit.

  • watchman Salt Lake City, UT
    Aug. 13, 2013 8:08 a.m.

    The Deseret News is to be commended on recognizing their awareness in the fallacies of the ethanol dream. It is past time that congress also recognize that what was done a few years ago by requiring that at least 10% ethanol be used in our gasoline was wrong, and repeal the law including requirements for subsidies on the production of ethanol for fuel.

    Present evidence shows that the ethanol move was not in the best interests of the taxpayers or the country as a whole.

  • Baron Scarpia Logan, UT
    Aug. 13, 2013 7:43 a.m.

    The two most promising technologies today are lower-cost natural gas and electricity (for electric vehicles). The problem with these fuels, however, is that you can't use today's existing combustion engines to run natural gas and electricity, and it will take time for drivers to adopt natural gas or electric vehicles in mass. Clearly, both government and private businesses need to develop strategies for encouraging adoption of alternative vehicles, including the expansion of natural gas and plug-in infrastructure and building confidence for people to spend money on new technology.

    The subsidies for ethanol needs to be seen in context of the more massive subsidies we throw at oil -- from our various wars in the Mideast to "protect" our oil access to the ongoing military efforts to guard oil fields and military ships to escort oil tankers our of the Persian Gulf to protect those oil lanes from pirates and terrorists. In essence, our military budget is largely a subsidy for our addiction to oil, but it is rarely considered as such.

    The benefit of ethanol, along with wind and solar, is that we don't have to fight for it overseas.

  • Twin Lights Louisville, KY
    Aug. 13, 2013 5:35 a.m.

    I think ethanol may one day prove viable. But not from corn (which is where we get it now). The economics of corn-based ethanol are stark. You can reference lots of studies but the math changes only nominally - you get out about as much energy as you put in once you account for all contributions.

    That said, nice to see the editorial board endorse the concept that "the world will have to make the transition from fossil fuels to something more sustainable. That's why we welcome efforts, both public and private, to develop the energy sources of the future."

    An endorsement of the need to (eventually) move away from fossil fuels and an acknowledgement that public and private efforts can bear fruit here. Nice.