Sowell: End Transfer Payments to Billionaires
"My plan would start by cutting off all government transfer payments to billionaires. Many, if not most, people are probably unaware that the government is handing out the taxpayers' money to billionaires. But agricultural subsidies go to a number of billionaires. Very little goes to the ordinary farmer.
Big corporations also get big bucks from the government, not only in agricultural subsidies but also in the name of "green" policies, in the name of "alternative energy" policies, and in the name of whatever else will rationalize shoveling the taxpayers' money out the door to whomever the administration designates, for its own political reasons."
77 Comments:
"But agricultural subsidies go to a number of billionaires. Very little goes to the ordinary farmer."
"Benji"? "Benji"?
And where do these knock-kneed, mollycoddled, cousin-marryin', three toothed, subsidy collectin' losers live? Not in those rural states. Not next to those hard working farmers and ranchers who receive very little in the form of subsidies. No, they're "Benji's" friends and next door neighbors.
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Very little goes to the ordinary farmer.
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Yup. In my county 90% of the crop support goes to ten farms. One of the owners will be happy to tell you how profitable farming is, and how preserving farms is good for the county. He rakes in over $80k in subsidies.
There are a lot of ag checks that get mailed to addresses in Bethesda and Potomac.
But without those checks the owners would need a lot more rent from the actual farmers.
It is time to end the USDA completely.
Check out these stats: By employment, largest federal departments, and USDA is high on the list.
Defense: 3,000,000
Veterans Affairs 235,000
Homeland Security 208,000
Treasury 115,000
Justice 112,000
Energy 109,000
USDA 109,000
We also have
HUD 10,000
Labor 17,000
HHS 67,000
Obviously, since the USDA cares so deeply about rich agribusiness, it has no serious mission. I recommend total elimination.
Add to that the VA. Let's give veterans medical vouchers, and let them select their own health care coverage (the Ryan idea, and a good one).
By going to free market solutions, we could eliminate these two federal agencies, and wipe off the taxpayer's dime the 344,000 federal employees--and their inevitable public pensions.
Che-
Believe me, rural America gets more subsidies than any other region of America. It is not just crop subsidies--it is federally subsidized roads, water systems, power systems, airports, rail stops, telephone service, defense patronage etc etc etc.
The problem is that every rural state gets two Senators--and Congress loves lard.
BTW, I now support Ryan for president--his plan is a baby step in the right direction, and he obviously has never even glanced at the above employment stats. But at least he is willing to shake the box a little bit. I wonder if Ryan has the "guts for cuts" when it comes to favored agencies--he has not called for radical reduction at USDA for example. But, he is the best shot we have now.
Believ me, rurl America gets mroe subsidies than any other region of America.
==============================
Sorry, I don't believe you.
Roads run both directions: the rural roads in my area re jammed with bicyclists and weekend tourists.
I don't know of any block grants in my area, or transit subsidies. And lots of those farm subsidies come with major environmental strings, designed to protect water supplies for urban areas, etc.
If the subsidies result in greater supply and lower prices, that benefits who? The urban areas, mostly.
Etc Etc.
Besides the AG department does a lot of work in promoting development and businesses in rural areas, not just ag stuff.
Is the situation a mess? Yes.
Is shutting down the USDA an oversimplistic response? Probably.
What a Phony.
GE makes $14 Billion, and doesn't pay Any taxes, and then pays a portion of that out to Warren, and the Super 400, and they pay 15%.
And Sowell i worried about a guy with 200 acres getting help with his crop insurance (adds about a quarter to the cost of a bushel of corn - 56 lbs.)
Sowell is full of it. He's always been full of it.
"It is not just crop subsidies--it is federally subsidized roads, water systems, power systems, airports, rail stops, telephone service, defense patronage etc etc etc."
What a relief to know that none of the roads, water systems, power systems, airports, rail stops, etc. in urban areas like southern California have been built with the aid of government subsidies. Moron. I wonder what the value of the water that urbanites like you receive from rural areas through subsidized water systems really is. Surely it's enough to pay for all of the rural infrastructure that you go on and on about. Let's give rural areas control of their resources and let the market set the price with the proceeds going to benefit the rural owners.
Hydra-
Go to The Tax Foundation (right-wingers) and check out their stats on what states pay and get back from the feds.
Rural states get back as much as $2for every dollar they send to the Feds.
For rural Amnerica, D.C. is always Fat City.
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Che-
Urban infratsructure is not subsidized as use is so heavy. It is profitable to lay in phone lines etc in a city.
In rural areas, it is not. The free market does not allow for such areas to have infrastructure.
So the feds (meaning us taxpayers) pony up--and bigtime.
Without federal subsidies, rural America would blow away, and I think it should. It has become a parasitical barnacle on taxpaying Americans.
"Go to The Tax Foundation (right-wingers) and check out their stats on what states pay and get back from the feds."
Most of this money is transferred in order to support government mandated programs that were dreamt up and implemented by politicians from what you call "urban states". And as has been explained to you before, these same urban politicians are responsible for putting the resources of rural states out of reach. Keep your lefty programs to yourself and stop interfering with rural land use and resource policy and the situation will change, if not reverse. Can you possibly be this dense?
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Che-
I think you have no factual basis upon which to stake your claims.
Lard flows like the Niagara into rural states, and you say that is due to liberal programs? What evidence do you have for that?
In any event, I stand by my belief that every state is entitled to get back from Fat City (DC) as much as they pay in.
Why should some states subsidize other states, not just for years, decades but for generations? It has created an enfeebled, mollycoddled, inbred rural economy, dependent on constant federal lard to survive.
BTW, can you get behind eliminating the USDA and the VA? It seems the free market would provide better results than these two agencies, and we woud eliminate more than 300,000 federal employees.
What is not to like about this suggestion?
It is only by cutting that we can reduce federal waste.
"Urban infratsructure is not subsidized as use is so heavy."
You are such a moron. The very water that you drink is coming from a government subsidized system designed to take a rural resource - fresh water - and deliver to "parasites" living in urban areas. Again, free up the land and resources that left-wing urbanites like you have made it illegal for rural states to exploit and all your bullshit arguments go away.
Che-
Imagine wiping out the tax-eating 344,000 employees of the VA and USDA, and putting them back into the jobs- and wealth-creating private sector. This would be a boon for America.
rufus-
perhaps if you actually read sowell's column before spewing your vitriol, you would avoid making such a fool out of yourself.
from sowell:
"Big corporations also get big bucks from the government, not only in agricultural subsidies but also in the name of "green" policies, in the name of "alternative energy" policies, and in the name of whatever else will rationalize shoveling the taxpayers' money out the door to whomever the administration designates, for its own political reasons."
clearly, you did not even bother to read his work or else you would realize that he had already made the points you accuse him of being a phony for skirting and that he was speaking of big farmers, not the 200 acre straw man you attempt to use.
seems to me that he who criticizes another's writings without first reading them is the real phony, no?
"And Sowell i worried about a guy with 200 acres getting help with his crop insurance ..."
Apparently, you don't read any better than you spell. He is not worried about the "guy with 200 acres", he wants to cut off the billionaires and large corporations who receive the lion's share of farm subsidies.
Guys, like you, are full of it. And you've always been full of it.
She is Dead-
Your postings are truculent, but devoid of substance. Please reconsider your contributions.
You must read a LOT better than I do, Morgan; because I can find Nothing in his article regarding Large Corporations (such as GE) transferring their profits to overseas subsidiaries, and thus avoiding ALL taxes on same.
Maybe you could refer me to the paragraph where he discusses this.
He did mention big corporations getting subsidies for "green" investment.
Then he continued on with his same old, tired anti-social security, anti medicare, anti everything but pure feudalism arguments.
You are right about one thing though. I did not read the article before I commented. Sowell is entirely too predictable for me to waste time reading his sundry, and assorted nonsense.
che you know I was wondering about cutting off payments to the rich...
Now if one considers the corporate farms are we talking actual dollars changing hands or are we talking tax credits or something like that?
rufus-
now you are just being disingenuous to try to get out of the corner into which you painted yourself.
you admit that you did not read the article that you criticize and accuse of being phony.
that makes you a hypocrite, pure and simple. own up to the mistake and move on.
thrashing around pretending that calling out green subsidies for big corporations is not a direct dig at GE is just silly.
further, the overseas tax issue is totally separate from subsidies. now you are trying to expand the debate to try to find a loophole through which you can slide and not look like you have no reading comprehension.
that's just a dirty rhetorical trick.
you are just making up opposing points of view and arguing with yourself, just as you did in you initial comment which you have already admitted was made without reading.
grow up man.
Wow, those poor old overtaxed corporations have accounted for a whopping 5.5% of Receipts so far this year.
$55 Billion in Six Months. Ah, man, it must hurt SO bad. Can't Thomas Sowell do sumpin?
I did grow up, Morgan. And, I, soon thereafter, quit paying any attention to Thomas Sowell.
I noticed he didn't say anything about the $50 Billion in subsidies to fossil fuel companies last year.
Doesn't it say "something" that I was able to predict what was in his article without even reading it? Perhaps you should "grow up."
ps.
what's wrong with shopping for an attractive tax jurisdiction?
i just moved out of california, in part to get away from their 10.7% income tax rate.
does that make me unpatriotic to california or a rational maximizer of personal wealth? we are not milch-cows.
why is moving a factory overseas any different? if anything, it's more forgivable as the board and officers of GE are LEGALLY REQUIRED to maximize shareholder value.
you seem astounded/outraged that a corporation would seek to maximize profits.
but these are not subsides nor giveaways. why should a non american factory with non american workers pay american taxes?
you are also barking up a highly populist, but largely irrelevant tree.
i would bet you that the full effect of corporations offshore operations in terms of tax reduction is not 10% of the effect of the mortgage interest deduction and far less that what farmers get in direct subsidies and price supports from ethanol.
Now who's being "disingenuous?"
The Entire Corn Market is about 25% of what your large corporations are holding overseas in their tax-dodging scheme.
Farmers get NO direct subsidies from ethanol (that goes to the oil companies in the form of the VEETC.)
About the only subsidies the corn farmers are getting, at present, is some help with their crop insurance. I believe that came out to a tisch less than $2 B last year.
I am amazed at all the people who say they "want to cut the federal government."
Here I have proposed a reasable, free-market plan for eliminating 344,000 federal employees at the VA and USDA, and no one likes it.
Are you not really free-marketeers, and just blubbering R-Party hacks?
rufus-
if commenting on articles you freely admit that you did not read is your definition of "grown up", i think i am beginning to see the problem.
i have already walked you through the reasons you cannot annualize the corporate number you cite, so you already know why you are wrong there. go back and read the last thread.
i did not say that farmers got direct subsidies from ethanol. i said that they got price supports. these come from the demand created by such a policy. can you possibly beleive that the ethanol requirements do not dramatically increase the price of corn. we pay for that. it's just like a tax on consumers.
veetc goes mostly to cellulistic ethanol producers and, along with a tariff on imports mostly screws consumers and provides price supports for farmers and processors.
US oil companies have some of the highest effective tax rates of any american industry.
"Doesn't it say "something" that I was able to predict what was in his article without even reading it? Perhaps you should "grow up.""
but you didn't.
you were wrong.
you completely missed his argument against corporate subsidy.
the ability to admit that is an important part of being a grown up.
Rufus,
"I noticed he didn't say anything about the $50 Billion in subsidies to fossil fuel companies last year."
Itemize those "subsidies" for me. When it comes to Big Oil, I find the "subsidies" liberals complain about usually mean the deductions and write-offs most other businesses utilize.
Benji,
"I have proposed a reasable, free-market plan for eliminating 344,000 federal employees at the VA and USDA, and no one likes it."
It must be lonely being the one heroic Milton Friedman incarnate Truth Teller on this board.
Here are state rankings for corn subsidies from 1995-2009. Iowa is #1 with 13.7 billion dollars in corn subsidies over fourteen years -- or about one billion a year.
Total farm subsidies (1995-2009) for Iowa were 21 billion dollars, or about 1.5 billion per year.
What a relief to know that none of the roads, water systems, power systems, airports, rail stops, etc. in urban areas like southern California have been built with the aid of government subsidies.
=============================
I think Che raises a valid point.
There is a lot of money sloshing around, and it is difficult to get a handle on who gets too much of what.
This can be argued either way (as the Tax Foundation does).
I think the urban and rural areas are symbiotic: Urban areas cannot do without rural resources and rural areas cannot do without urban markets.
I'm required to operate in certain ways to help insure clean water to the urban areas below me, but the water that collects on my farm and runs off is a public resource. It is not a product that I get paid for taking care of.
Paul-
As I now support a Ryan bid for President, I hope you come to find my commentary less objectionable.
Morgan, you wrote:
"and far less that what farmers get in direct subsidies and price supports from ethanol."
NOW, "I" am beginning to see the problem.
Morgan, You have ABSOLUTELY no idea what you're talking about. VEETC has NOTHING to do with the "Source" of the ethanol.
ALL ethanol (domestic corn-derived, as well as imported sugarcane ethanol) is eligible for the VEETC (also referred to as the "Ethanol BLENDING Credit.)
Exxon paid NO Federal Income Taxes in 2009.
also:
you repeat this lie over and over again as though pure repetition will make it true:
"GE makes $14 Billion, and doesn't pay Any taxes"
GE paid over a billion in taxes in 2010. you'd know this if you ever bothered to read things before you discuss them.
that's certainly not "doesn't pay Any" with a capital letter. that may be low, but it's not "none".
once more, it seems the facts are not what you claim.
worse, you have your attribution of why this is the case all wrong as well.
look at note 14 in the GE 10k. (page 312) you will see that GE paid over $2 billion in taxes. it was only GECS (not a foreign entity) that drove the taxes down to $1bn.
thus, GE proper paid about 17% taxes which only dropped into the 7's because of capital services and it's loss carryforwards.
i suspect you will find that people will take you more seriously if you get the facts before you opine on topics which you clearly do not understand. making stuff up just is not going to cut it, but, given your apparently unapologetic preference for commenting on that which you have not read, i fear you are unlikely to make it over this hurdle.
Show me the part where they wrote a Check to the Federal Government for Income Taxes.
I would take you more seriously if you didn't type something, and then deny it two, or three comments further down the thread.
wrong again rufus.
you really need to start looking things up before you opine. you are looking increasingly as though you have no grounding in reality at all.
The Volumetric Ethanol Excise Tax Credit (VEETC) is a policy to subsidize the production of ethanol in the United States. It was originally created by the American Jobs Creation Act of 2004. (The Renewable Fuels Reinvestment Act, RFRA, introduced in 2010 by Congressman Earl Pomeroy (D-ND) and John Shimkus (R-IL) would extend the tax credits set to expire on 31 December 2010.)
The tax breaks include "a 45-cent a gallon tax credit for gasoline blenders, a 54-cent a gallon tariff on imports, a $1.01 a gallon credit to cellulosic ethanol producers, and a 10-cent a gallon small-producer tax credit for ethanol." (Source: House Bill Extends Ethanol Tax Breaks To 2016, 26 March 2010 by Planet Ark)
"Show me the part where they wrote a Check to the Federal Government for Income Taxes."
what, you think i have access to GE's canceled checks?
now you are just behaving like a buffoon.
read the income and cash flow statements yourself. you think the IRS doesn't read GE's 10k?
Exxon paid NO Federal Income Taxes in 2009.
XOM paid 15.1bn in taxes in 2009 on 34.8bn in profits. that's over 43%.
look it up yourself.
so much for big oil not paying taxes...
just more made up rufus "facts" that fall apart under 30 seconds of scrutiny.
Total National Subsidies for Corn Producers were $3.9 B, and change in 2009
After allowing for DDGS, about a quarter of that can be charged off to Ethanol; say $1 Billion.
$1 B/approx 13 B gallon would be about $0.08 gal. to the farmer.
That would be less than a penny's subsidy to the corn farmer in a gallon of E10.
It has been estimated in Peer-Reviewed Work that the presence of Ethanol in the marketplace is lowering the price of gasoline by as much as $0.35/gal.
What? Morgan? You think people can't Read? Or remember what you typed at 01:55?
You wrote: veetc goes mostly to cellulistic ethanol producers and, . . .
Out of approx 13 Billion Gallons of Ethanol eligible for the VEETC, last year, less than a million gallons were "cellulosic."
The Univ of Tenn/Dupont Danisco demonstration plant at Vonore, Tn might have had 200,000 gallons, and I'm not sure anyone else actually blended any for sale.
The VEETC applies to ALL ethanol blended for sale.
There is a provision in the bill that gives a "Producer's" Credit for cellulosic to be applied On Top Of the blenders credit. IIRC it is $0.56.
The Import tariff is to make up for the fact that imported ethanol receives the blender's credit in the same way that domestic does.
BTW, I stated "Exxon paid no Federal Income Taxes in 2009.
You keep conflating "Income Taxes" with "Taxes."
I'm sure no one noticed. :)
corn production is around 13.1bn bushels.
25% of that crop goes to ethanol. this was the result of a government mandate.
you can argue how much of the price was incrased/supported by this, but it's at least $1 and maybe $2.
that's an awful lot of price support. ($13-26bn/year) that is not included in the figure you cite.
Yes, but if the competitive pressure of having ethanol in the marketplace is lowering the price of gasoline by $0.35/gal that would be a benefit to the consumer of approx. 140 B gallons X $0.35, or $49 Billion. Annually.
That would be less than a penny's subsidy to the corn farmer in a gallon of E10.
It has been estimated in Peer-Reviewed Work that the presence of Ethanol in the marketplace is lowering the price of gasoline by as much as $0.35/gal.
================================
Similar to most other products that hit the shelves: the farmer only gets a tiny piece of the action.
Part of the reason is that fqarmer tend to be individualists. Despite their long history of working in co-ops, they are not very good at collective bargaining.
"BTW, I stated "Exxon paid no Federal Income Taxes in 2009.
You keep conflating "Income Taxes" with "Taxes." "
and, as ever, provided NO data to back up you claims which are, again, spurious and disingenuous as oil companies pay large excise taxes as well as income to the federal government.
read p53 XOM 2009 10k:
"income, sales-based and all other taxes and duties totaled $78.6 billion in 2009, a decrease of $37.6 billion or 32 percent from 2008. Income tax expense, both current and deferred, was $15.1 billion, $21.4 billion lower than 2008, reflecting lower pre-tax income in 2009. A higher share of total income from the Upstream segment in 2009 increased the effective income tax rate to 47 percent compared to 46 percent in 2008. Sales-based and all other taxes and duties of $63.5 billion in 2009 decreased $16.2 billion from 2008, reflecting lower prices and foreign exchange effects. "
see the part about income tax?
15 bn is zero, huh? 47% effective tax rate is none?
are you claiming that's all state?
not in texas. that rate is 4.5%
they sure paid another 42.7% to someone...
so where is your evidence?
The # 1 Farm Subsidy recipenent in 2009 was Fidelity National Title Insurance. The subsidity was for "Wetlands Reserve Program". Hmmm, must be a green type program.
Here are the Top 20 subsidy recipients for 2009.
Let me say it again. They paid No Federal Income Tax in 2009.
Federal = U.S.
They might have paid $15 B to someone, but it wasn't good ol' Uncle Sugar.
"Yes, but if the competitive pressure of having ethanol in the marketplace is lowering the price of gasoline by $0.35/gal that would be a benefit to the consumer of approx. 140 B gallons X $0.35, or $49 Billion. Annually."
ethanol is lowering gasoline prices/consumption?
you have you have to be kidding.
ethanol has 76k btu/gal vs 115k for gasoline.
that means you get worse mileage and need more gasoline.
thus, fair value for ethanol on a per BTU basis would be 65% of the price of gas. it's upping costs, not lowering them.
and let me say it again:
where is your evidence?
you make that claim over and over, but do not substantiate it in any way.
Benji,
"As I now support a Ryan bid for President, I hope you come to find my commentary less objectionable."
A)There's no evidence he's even running.
B) You predicted the GOP Congress would be a lard increasing disaster. Ryan's plan was made possible by the Tea Party fused GOP Congress. I guess you were wrong about everything.
How about billionaire ends transfer payments to government workers:
Donald Trump - "You're fired."
Morgan, if we took the 930,000 Barrels/Day out of the market we would have to go find another 3/4 of a Million barrels/day of gasoline. You think that increased demand would have no effect of Prices?
You have to take Ethanol's 114 Octane Rating into consideration; not just its btu content. You, actually, lose about 20%/gal, or 2% when running E10. On Average. Some cars are better, some worse.
Ethanol (front month futures) are selling on the CBOT, today, for $2.66 gal. This is the price before the blenders credit is applied.
Gasoline, front month, is about $3.16. Pretty close. Giving up about a dime. More than made up for by the lessened demand for oil, I'm sure.
Gotta go find the API numbers. Later.
further:
you'll notice that they paid $37bn in duties etc in 2009.
much of that goes to the federal government as the tax on oil XOM brings into the US from the rest of the world. even if you are correct (and you are not) that all their income taxes in 2009 were offshore, they are still paying massive US federal tax.
then they paid 26bn to states (and the feds) in sales tax - note that there is a federal sales tax on gasoline (18.4c/gal)
exxon pays a TON of taxes in the US, enough to personally cover the whole US farm program.
you sure you want to use this as an example of tax avoidance?
they probably pay more taxes than any company on earth.
they paid 36bn in income taxes in 2008 and total taxes of $116bn.
you want to try finding me a company that pays even half that?
their income tax rates are in the high 40's.
you call that tax avoidance? and then they pay incredible import duties on top of it.
they are taxed every time they turn around. i doubt you can find a single company that pays more US taxes than XOM or even US federal taxes, even if they paid no income tax at all.
Paul-
Well, if Ryan runs, I will hold my nose, snort some crack, drink down a slug of whiskey and vote for him. P.U., but maybe our best option right now. If you are dying of thirst, then drink toilet water.
You think the R-Party has cut the lard? $33 billion? Oh wow, so much.
You fall for this little silly PR stunt?
Please, Paul, the R-Party does not have the "guts for cuts."
Besides, as you see from federal employment figures, the R-Party would have to cut programs that benefit their campaign backers to even make a dent.
That is not going to happen.
Check out these stats: By employment, largest federal departments, and USDA is high on the list.
Defense: 3,000,000
Veterans Affairs 235,000
Homeland Security 208,000
Treasury 115,000
Justice 112,000
Energy 109,000
USDA 109,000
We also have
HUD 10,000
Labor 17,000
HHS 67,000
even at 3.16 X.8 = 2.52, ethanol is still overpriced. it certainly does not save the money you claim.
and, as you say, that is the price before the blender's credit is applied.
thus, the real (unsubsidized) price is considerably higher.
what is that, 45c a gallon?
we're still paying that, just not at the pump. it's still a cost in the system.
no way that a 1.2% increase in global oil demand drives a 20% hike is gas prices. the elasticities are not that high.
One way to balance the federal budget is scale back to the 2007 spending level (savings $1.1 trillion) and outsource part of the $3.8 trillion in spending this year (at least another $1 trillion in savings?).
I suspect, most public workers can be replaced with better workers, including the President :)
Peak Trader:
Wipe out the VA, give veterans medical vouchers; wipe out the USDA; and put in locking cabin doors on airliners and give pilots shotguns, and wipe out Homeland Security.
These three steps will cut more than 500,000 federal workers off of your payroll, and add zero risk to your life.
Does either the D- or R-Party have the "guts for cuts"?
I think not.
The question should be:
Does this government deserve a raise? (from taxpayers).
No, Morgan, you misunderstood. After the blenders credit it was $2.21. ($2.66 - $0.45 = $2.21)
A $0.14/gal difference (mileage adjusted cost) would only be .14/3.16 or a 4% difference.
Could a 750,000 bbl/day increase in gasoline demand cause a $0.14/gal increase in the price of go juice? I think that's quite likely.
Octane rating does not relate to "the energy content of the fuel (see heating value). It is only a measure of the fuel's tendency to burn in a controlled manner, rather than exploding in an uncontrolled manner. Where the octane number is raised by blending in ethanol, energy content per volume is reduced."
It is energy that moves the car, not Octane rating. However you can waste energy if you have a fuel that detonates, (not high enough on the octane scale). You also waste energy if the fuel burns too slowly (piston reaches bottom before it is all burned).
But for most engines not running under conditions where they might knock, octane doesn't mean much.
At least that is my modest understanding: rufus no doubt has a different story.
"No, Morgan, you misunderstood. After the blenders credit it was $2.21. ($2.66 - $0.45 = $2.21)"
and that 45 cents appears as if by magic and no one pays for it?
we are still paying for that, just not at the pump. i can see your point that we can ignore the credit and call it a push, but you certainly cannot subtract it from overall cost to consumers.
take a 20-30% mileage cut (consumer reports found a 29% drop in mileage) and you are talking about a gasoline equivalent price of 3.55/gal at midpoint.
that's not 4% higher, it's 12% higher, even at the high gasoline prices currently prevailing.
that would be a bit of a stretch for a 1.2% increase in demand.
i just do not see much of a case that ethanol is saving money on driving. at best, it's a push, but only at high gas prices. use 2008 or 2009 prices, and it's been a huge loser.
Your understanding is pretty close, Hydra. In the typical nine-ish CR engine the higher octane will mitigate some of the loss of btus, but not nearly all of them. For instance, in my flexfuel Chevy impala I give up about 20% mpg using E85 (85% ethanol, 15% gasoline.) I probably get about a four, or five percent increase in power.
In a high compression engine, however, you can easily get a 20% increase in power using E85. This means you can "downsize" your engine, and end up with similar HP, and fuel economy as running gasoline in a larger engine.
Probably within a year there will be engines on the market that, by utilizing variable speed turbos, VVT, Direct Injection, and heated injectors, will be able to get the same mpg (but with much greater power) running e85 in the same engine as gasoline. GM is well on their way to that, now.
Well, actually, Morgan, most of that $0.45 Is passed back to you at the pump. I guess if you do all of your traveling by bicycle, and subway you're the biggest loser in the deal. (actually, it's the peasant in China, but we really don't want to go there, right. :)
I think, Morgan, that if we don't go into Recession before July you will probably see ethanol selling for about $0.50/gal cheaper (or more,) and gasoline quite possibly selling for a higher price than now. Then, the shoe's on the other foot, No?
And, again, what would the need for another 750,000 bbl/day of gasoline do to prices?
It probably boils down to this, Morgan: If we are at, or near, peak oil as I think, ethanol is going to be a good thing.
If I'm wrong, and the con men have managed to obscure the fact that we're sitting on top of a great chewy nougat of black wonderment, then I'm an idiot, and the peepulz haz been played for fools. We'll see. :)
"Well, actually, Morgan, most of that $0.45 Is passed back to you at the pump"
which is why i said "i can see your point that we can ignore the credit and call it a push, but you certainly cannot subtract it from overall cost to consumers."
if you take money out of one pocket and put it into another, that is not savings.
however, i presume you will also agree that not all of it comes back to consumers. there is always slippage in such transfers. some costs arise from government, some from additional profit for producers, etc.
so, it is, in all likelihood, still a net loss, not a full 45c loss, but certainly one greater than zero.
further, have you looked at corn prices lately?
since mid 2010, corn has nearly doubled in price. it may back off some as we get close to the US harvest, but if it keeps most of these gains, i think your projection of the gap may be questionable.
it's already 50c cheaper. that is not enough to reach mileage parity. it would need to be 75c cheaper (assuming 25% mileage loss).
i think you may need to check your math.
also:
regardless of peak oil, corn ethanol is not the answer.
we ought to be importing sugar based ethanol from brazil or looking into biodeisel options.
it's not even clear that corn ethanol production is a net energy gain. many would argue that it is a net loss if you take the cost of growing the corn into account.
"Abusing our precious croplands to grow corn for an energy-inefficient process that yields low-grade automobile fuel amounts to unsustainable, subsidized food burning," said the Cornell professor in the College of Agriculture and Life Sciences. Pimentel, who chaired a U.S. Department of Energy panel that investigated the energetics, economics and environmental aspects of ethanol production several years ago, subsequently conducted a detailed analysis of the corn-to-car fuel process. His findings will be published next month in the forthcoming Encyclopedia of Physical Sciences and Technology.
"# An acre of U.S. corn yields about 7,110 pounds of corn for processing into 328 gallons of ethanol. But planting, growing and harvesting that much corn requires about 140 gallons of fossil fuels and costs $347 per acre, according to Pimentel's analysis. Thus, even before corn is converted to ethanol, the feedstock costs $1.05 per gallon of ethanol.
# The energy economics get worse at the processing plants, where the grain is crushed and fermented. As many as three distillation steps are needed to separate the 8 percent ethanol from the 92 percent water. Additional treatment and energy are required to produce the 99.8 percent pure ethanol for mixing with gasoline.
# Adding up the energy costs of corn production and its conversion to ethanol, 131,000 Btu are needed to make 1 gallon of ethanol. One gallon of ethanol has an energy value of only 77,000 Btu. "Put another way," Pimentel said, "about 70 percent more energy is required to produce ethanol than the energy that actually is in ethanol. Every time you make 1 gallon of ethanol, there is a net energy loss of 54,000 Btu."
Rufus, you lost me on the part about power.
If I have more power available, doesn't that translate into more MPG?
I'm assuming here, that I'm not buying (and feeding) all that power just so I can get outlandish acceleration, or tow my 35 ft boat. I'm also assuming you have a transmission that can use the avaiolable power well. (Not that two speed slush box I once had in an old chevy.)
Fuels burn faster at higher pressure, so a high compression engine burns the fuel all at once, and sometimes so fast it detonates, which we recognize as knock. But knocking represents a waste of energy (creating an explosion inside the cylinder before the gas expands enough to start pushing the piston).
Theoretically, the most efficient engine is adiabatic, meaning it has the same cylinder pressure throughout the stroke. Technically, this is hard to do, without wasting fuel, because to keep the pressure up you need to burn fuel all the way to the end of the stroke. Not all of it will burn, so you waste some fuel in the exhaust. A long stroke, slow turning diesel is the best example of this, as you can inject fuel as needed to keep the cylinder pressure up, almost to the end of the stroke.
With an HC engine, the combustion pretty much happens all at once. Youcan do that under optimum conditions of pressure and air and get a good clean burn. But as soon as that is finished, you are in a non adiabatic state: you have a hot compressed gas that cools and loses pressure as the piston moves.
Consequently a HC engine uses a short stroke (typically over square) and high rpm compared to a more adiabatic engine of the same horsepower. (The high rpm lets you take advantage of the rapid burning fuel,and stay at least a little bit adiabatic at the top of the stroke.) And, all that pressure for the high compression comes from somewhere, so it isn't free either.
As I understand it HC gets you a clean burn, and a lighter engine for the same horsepower, but it is not mechanically efficient. A slow burning engine is more mechanically efficient, (and has more torque) but releases some unburned fuel.
Power is work divided by time. The high reving engine burns its fuel charge quicker, so you divide by less time and you have, more power.
But that is meaningless if you drive the car for an hour. You burn a gallon of fuel and you go 33 miles. It takes a certain amount of work to move the car, and to do it in a certain time requires a certain amount of power.
Take that high reving engine out and put in a slow turning diesel, it still takes the same power to move the car the same distance in the same time. (Maybe a little more because the diesel engine is heavier, but say we accommodate with ballast.)
Seems to me I could take either engine and dilute the fuel with ethanol. Both engines will use more fuel in order to do the work of moving the car, (less energy available) and if they both do it in an hour the same power is used.
Measured at the same RPM, the HC engine will burn cleaner, (and burn less) but a load that would stop the HC engine cold at that RPM won't faze the slow turning diesel (same RPM, more fuel used, more energy available, longer crank arm, more torqe, more work done in the same time period, therefore more power).
It is wierd that the HC engine burns fuel better, but uses is mechanically less efficiently, so you use more, which offsets its efficiency to get a given power.
The slow turnjing diesel is mechanically efficient but wastes a little fuel to do it. To get the same power, you use less fuel, but you also waste some.
The other wierd thins is that just beause you burn fast, does not mean the combustion itself is more efficient. You need either time for the oxygen molecules to find the fuel moledcules, or you need an excess of air to ensure all the fuel burns.
So I don't see how you figure you get 20% LESS mpg but more power.
????
Peak Trader,
"Does this government deserve a raise? (from taxpayers)."
Man, that is brilliant. The GOP should hammer that home.
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