Just as the fiscal crisis sweeping through the major oil-consuming nations of the world is cutting funding for green energy, one of the most expensive yet least efficient of green fuels, corn-based ethanol, has been given another year of generous taxpayer support in the US.

The promotion of corn-based ethanol has been America’s principal policy response to its growing dependence on ever more costly foreign oil. Fuelled by a federal tax credit of 45 cents per gallon and a crippling 54 cent per gallon tariff against competing Brazilian sugar-based ethanol, American ethanol production has grown exponentially over the course of the last decade to around 12 billion gallons per year in 2010. And it’s targeted to grow to as much as 36 billion gallons by 2022. Food inflation, particularly with respect to corn prices, has moved in step. Thanks in large measure to ethanol demand, US corn prices are up some 40 per cent this year.

Food inflation aside, Congress had lots of other good reasons not to extend further subsidies. The net energy content from ethanol, after allowing for all the hydrocarbon inputs (ranging from fertilizers to diesel fuel for the tractors to coal for the processing plants), is marginal at best. And its carbon footprint isn’t materially better than burning fossil fuels, given how much of the latter is embodied in its very production.

Despite a last-ditch attempt by Senator Dianne Feinstein and others to end the subsidies, the Senate decided to fork out more pork barrel funds to corn farmers and, by extension, to firms like Monsanto and Archer Daniels Midland for another year.

But don’t count on American ethanol production’s ever coming even close to reaching that lofty target of 36 billion gallons per year. If the return of fiscal sanity to Washington doesn’t undercut its life-sustaining subsidies, an aborted recovery in motor vehicle sales will soon put the kibosh on future production growth.

Car manufacturers and ethanol producers both hope that an economic recovery will return vehicle sales to their pre-recession levels. Unfortunately, the recovery they are counting on so heavily is a double-edged sword.

An economic rebound will very quickly push pump prices beyond most drivers’ reach. They’re already hovering around $3 per gallon, and with triple-digit oil prices around the corner, we’re sure to see prices of $4 per gallon or higher by next spring.

The last time we saw those prices, in the summer of 2008, scooters were outselling SUVs by a margin of three to one, and no one was keen to scoop up car-leasing firms and make acquisitions like Toronto-Dominion Bank’s recent $6.3 billion purchase of Chrysler Financial. Four-dollar gas crunched the North American vehicle market back in 2008, and it will likely do the same in 2011.

And when it does, American farmers can go back to growing corn for food and, in the process, save taxpayers some $7 billion a year in ill-conceived ethanol subsidies.

  • Rojelio

    Are we anywhere near to being able to produce cellulosic ethanol?

  • Ron

    We need to start converting to mass transit and cars running on electricity. Ultimately what power sources we have will be electric based as oil becomes unavailable for transport. A major study on using Thorium for nuclear power needs to be started while we also find ways to store electric power from intermittent power sources. Reduced consumption of mfg. goods and population control must be part of the mix. Our form of government will probably not work for this. We will need highly educated leaders that are not making up lies to get elected. We will need longer election cycles and severe limits on campainge spending. Mostly we need debates on important issues, (not social issues except as pertains to changing our society to survive). Does the US have the will to do this? I don't think so.

  • JKJ

    Toronto-Dominion Bank’s recent $6.3 billion purchase of Chrysler Financial: Is this is Canada's version of BofA's acquisition of CountryWide?

  • zeke12

    If the Hirsch report is correct, we are long past the time to transition to anything. In addition, I haven't seen any alternatives that come anywhere near replacing 400 million gallons of gas a day. From my experience, you have to hit an American along side the head with a 2×4 just to get their attention let alone learn anything.

    We will continue to bicker like children for a time. Blog comments, typically, quickly disintegrate into one group against another. How can you carry on discussion in such an atmosphere? Or we wander off into the fantasy land of “how things should be, we could do this or that”. So be it.

  • Bellerophon

    They gave up on that. They are now going after bicycle tyres.

  • Bellerophon

    Just let the oil companies, pipeline companies, re-workers etc. get back to work without the political interference vis a vie environmental bs and the problem would be solved. In fact the problem would never have developed. Also quit frittering away capital and time on fringe energy useless projects like wind and solar. The oil sands could supply North America for the next several centuries, nevermind the Bakken, re-worked Cardium etc.
    Count on the infiniteness of human engenuity rather than the peak oil hysteria.

  • Wyton

    We already have $4.00 gas in BC. No big deal.

  • Douglas D Kruger

    Apologies in advance as my comments are more directed at the book. First and foremost, Jeff wrote the book very well and was able to back it up with real situations and explanations. In reading this book along with other books, our economy 'as is' is very fragile and this is helping me plan for the future.

    A few errors in the book (please do not view this as being critical but rather just updating so future releases would be corrected).

    Page 275 – Bill Gates made the comment with 640 KB of RAM not 64 mentioned in the book.

    There was a secondary comment on the Moore's Law – but cannot find this at the time I am typing.

    Thx again for the good book.

  • cleitophon

    There may be an infinity of possible ideas, but not law of nature. This bounds human ingenuity in a very real way, when it comes to technology. In fact Huebner has identified peak innovation in 1873 and documented a serious decline in innovation, which put us on par with medieval levels of innovation (sic)


    Not only that Moore's Law may be well documented, but increasing computer speeds are met by diminishing returns. Whether a computer takes a whole or a half microsecond to complete a calculation for me – its still just the wink of an eye either way.

    Finally, technology has resulted in an abundance of information, which creates intertia: things and ideas are developed 2, 3, 4 times. Complexity creates lost oppertunity costs.

    Truth is, most of the innovation we are witness to now is virtual innovation: pure fantasy in tv, movies, games, ads ect,, which creates the appearance of change. In reality – as regard technical mastery over the world – we are surrounded by old techology.

  • Bellerophon

    The pure fantasy now extant is the computer modelling that has convinced the scientifically illiterate majority that we are headed for catastrophic global warming if we don't do something about CO2. Listen to theoretical physicist Freeman Dyson on the state of this abomination which has now fed into H.L. Mencken's observation “The whole aim of practical politics is to keep the populace alarmed ( and hence clamarous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary. Scare em then tax em!

  • cleitophon

    Well, I remember when global warming was a fringe issue. Since then it was adopted by mainstream politicians around the world (with some notable exceptions). For this very reason I find it difficult to believe the conspiratorial tone you are setting up here. Those who are being criticised adopted the conclusions along the way, rather than dreaming up the idea by themselves. Bottom line is I, just don't get why you are raging about global warming, since it is very obviously real, although its causes are not yet fully explicated and there are good logical reasons to act:


    What is suspicious is that the most adamant global warming sceptics are often also the most adamant peak oil deniers. This tells me something about the true motivations involved.

    There is one thing I could accept, however, and that is that many politicians found global warming an easier sell to the public than peak oil, and it coincidentally had exactly the same solutions: conservation of energy and clean tech. Think about it, politicians around the world wanted a platform from which to distance themselves from the oil producing nations without angering them and thereby instigating a new oil crisis. Secondly: The whole notion that the earth is gonna be flooded in 2090 when you are dead anyway is a much easier sell than: modern industrial society is gonna collapse between 2015 and 2030, so you'll be working the fields into old age.

    There are simply so many reasons why global warming is a useful framework.

    Wait up – you don't think cop 15 and 16 were actually about global warming hahaha – that's funny stuff :)

  • Bellerophon

    Well it now looks like the coldest December in UK, Germany and Swden fo the last 100 to 110 years. Cooling caused by global warming! What a joke.

  • cleitophon

    How can you draw global conclusions from local observations? Facts are that global averages this year are higher than ever:


    This bitter irony is that the changing temperatures have shifted the flow patterns of the atmosphere, directing the remaining cold temperatures to our neck of the woods.

    You ought to read up on the North Atlantic Oscillation and the Quasi Biennial Oscillation.


    While we are freezing here, the artic has been utterly unable to rebuild its ice sheet this winter



    It has been the artic high pressure (which occurs because of unusually high temperatures) which has blocked the warm westerlies in europe.

  • Abitibidoug

    Quote: “Well it now looks like the coldest December in UK, Germany and Sweden fo the last 100 to 110 years.”

    There appears to be a lot of misunderstanding about the effects of global warming. On average, the world is warming up, but consider that the worlds weather is a very complex and system driven by heat energy. As more energy is added to the system, there is more turbulence and chaotic behaviour. The end result of a warmer world will be more extremes in weather. Now, in the new year, we look back on events that happened in 2010 and see a lot of extreme weather events. If climatologists are right with their predictions, there will be even more extreme weather events, along with higher sea levels, in the years to come. Often we hear that making the transition to a lower greenhouse gas emitting world will be too expensive. How about the rising cost of damage from extreme weather events if we don't? It appears most economists, especially those who are paid directly or indirectly by fossil fuel producing or consuming industries, don't consider those costs.

    Back to the original topic of this forum, namely peak oil. Just today I read that 1000 extra cars are going on the road every day in Beijing alone.* Meanwhile petrol prices keep climbing up and are now at $1.14 per litre where I live. Coincidence? Probably not.

    * source: Globe and Mail Dec. 31,2010 Globe Drive section page D7

  • Bellerophon

    Whilst accusing me of jumping to conclusions you are likewise trying to draw a global conclusion from your arctic playpen, and like all the warmists, are now starting to squirm. Hot causes cold …with new contradictory evidence of what is going on when it shouldn't. It's like the warmist proponents are travelling with Alice in Wonderland “If I had a world of my own, everything would be nonsense. Nothing would be what it is , because everything would be what it isn't. And contrariwise, what it wouldn't be it would.”
    You read to much blatent propaganda from the usual suspects..NOAA, NASA, GISS, warmist press. The two diagrams you present are blatent misrepresentations with 5 or 6 errors that you may find if you stop long enough to think critically.
    By the way, a one degree equatorial temperature change swamps about 20 degrees of Arctic change as far as heat retention is concerned because of moisture content. The cold in Europe is a significant event and we must recall the alarmist pronouncements of 6 or 7 years ago that British children would be lucky if they ever saw snow again!

  • cleitophon

    Look, the see-saw of temperatures between northern Europe and Greenland has been known for many many centuries, since the Danes began exploring the region in the the time of King Christian the IV in the 1600. This is not some ad hoc explanation invented for this particular case – it is supported by many decades of precise observation. And if the cold weather in Europe is significant then surely, so is 16 degrees centigrade in Nuuk around the first of december last year. That is 6 degrees above the July and August average temperatures for Nuuk and 20 degrees above the seasonal norm! Even now as we speak, South Greenland is experiencing temperatures up to 5 degrees – in the dead of winter.

    These are factual measurements form the Danish Metereologial Institute


    Your approach to climatology is nothing less than provincial and utterly unconvincing. Now as I said, there can be no doubt that global averages are climbing remoreslessly. The effect of such high energy levels in the atmosphere is not homogenous in a chaotic system, but in fact allows for more extreme temperature distributions.

    Think of a bucket with water in it. The faster you stir (more energy): not only do you create a deeper indentation in the middle, but the water will climb further up the sides, because of the centrifugal forces. More energy creates more distance between the highest and lowest water levels. According to your “theory” the water would increase uniformly in the whole bucket. Well, guess what: thermodynamics don't work like that.

  • Bellerophon

    You talk such scientific claptrap I'm surprised you can spell “thermodynamics”. Incidentally, the western Sea of Okhotsk, the heat pump of the north Pacific, the poster area in Siberia of the effects of global warming despite the cycical effects of weather……..just froze over with thick ice trapping over 500 ships with a Russian icebreaker to the rescue! Let's see how the warmists spin this embarassment. If the reducing ice extent has been used as evdence of global warming can we now say global cooling has begun?

  • cleitophon

    Cold weather stretching from Siberia and to the UK over northern Europe is exactly as prediced by a negative phase of the North Atlantic Oscilation.


    All you have is conspiracy theories and ad hoc reasoning. Get it in to your head that global warming is a statistical tendency calculated for a MULTITUDE of measurements ALL OVER THE WORLD! If you have ever seen a scatter plot you will know that individual data points can be located far from the regression function without it falsifying or invalidating anything!


    Using these data it is possible to develop confidence intervals for predicting likely temperature developments. Its is even possible to calculate the residual error in the model to identify model inadequacies, or employ a Durpin-Watson test or perhaps Breusch-Godfrey test to ensure the model is not covering up some other repeating pattern.

    You've got some nerve calling my arguments scientific claptrap, with the knuckle-dragging nonsense you've been spouting. Here's an idea: try opening one of those rectangular objects …. what is it now they are called …oh yeah: BOOKS! You might get beyond banal impressions and opinions for once.


  • cleitophon

    According to your logic, we should conclude that the earth is flat, 'cause looking out the window the earth looks flat. It even acts as if its flat in a sufficiently small area. But guess what: its not!

  • Jl3793

    No big deal at all. For some of us it simply doesn't matter what the price of gas is. If you have to worry about the price of gas then don't buy an AstonMartin. But for some of the people out there I bet that it is hurting them. I don't personally know them but I can imagine that. Wyton, it seems that you don't even have the imagination.

  • Jl3793

    Except that the last decade was the warmest in recorded history, And except that 2010 might just be the warmest year ever recorded.

  • Bellerophon

    You're a bafflegab artist trying to convince the world that hot cause cold like the rest of the warmist hypsters now caught in a big lie. Even the infamous Phil Jones of CRU infame has admitted that there has been no statistical warming trend in the last dozen years. A few more years of this warming and your knees will be knocking in your knickers.

  • Bellerophon

    I am sure Hansen/NOAA/NASA/GISS will twist things around as much as necessary to satisfy gullible puerile nincompoops operating at the low academic level of Cleitophon. But I don't take anything coming out of those organizations at face value as they are corrupted by government largess. Their data is also hopelessly corrupted. But I will give you one observation that is based on very complete data and that is that this London December is the second coldest on record since the Little Ice Age which ended abruptly around 1690. Let us see how the warmists deal with that.

  • Bellerophon

    There has been no statistically sinificant waming in the last 100 years, nor has there been any sea level rise, nor is there any evidence that greenhouse gases are creating “hockey stick warming”. All this comes out of Gore's book which is likewise 98% nonsense. I worry about the scientists that have been corrupted by GOVERNMENT money and this is what President Eisenhower warned us about 60 years ago.
    Weather events are no more extreme now than they have been historically and the only reason we hear more about them is because a lot more people live in vulnerable areas and communications are much more developed.

  • cleitophon

    Where exactly did I write that hot causes cold? Saying that hot causes cold would be like saying that night causes day. This would be the fallacy known as “post hoc ergo propter hoc” (after this therefore because of this).


    This is most definitely NOT what I am saying so stop simplifying my arguments.


    To use the Night/Day analogy, my point is that both have a common cause. For instance here we would say that night and day are both caused by the sun and a rotating earth. Here there is no logical problem what so ever in arguing that two opposites have a common cause!


    Nor is there any inherent logical problem in saying that higher energy levels in the atmosphere results in greater divergence between highs and lows.

    This will be my last post on this issue, since it is obvious that we are not getting anywhere.

  • cleitophon
  • Abitibidoug

    Quote: I worry about the scientists that have been corrupted by GOVERNMENT money

    Why would governments want to promote the idea that climate change could be for real? It's far more likely that these scientists who say there is nothing to be concerned about are corrupted by money from oil or coal producers, or big fossil fuel users like the automotive industry, or power generation utilities that use a lot of coal. It all looks suspiciously like the arguments put forth by the tobacco industry years ago saying there is no conclusive evidence that smoking causes heath troubles. Sadly, all this dithering and bickering about whether there is a problem or not will waste valuable time and the climate change problem will be so out of control it will be too late.

  • Bellerophon

    I would say, if anything, energy companies would be supportive of the agw nonsense as they know long term the use of fossil fuels will continue unabated and in the short term it drives up the price of the commodity they are selling. This is why BP gave Greenpeace $10 million last year and Encana bankrolls Suzuki. They also appear to be good corporate citizens as they participate in the mania. It's win-win. Also I believe some of the larger ones stand to make a fortune in the cap and trade boondoggle so they support that as well.

    Governments don't support anything except what is blowing in the wind so that individuals who wish to be elected must bow before the consensus of public opinion. They must be perceived as slaying the dragon and right now the dragon is CO2 and related codwallop.

    The real conflict of interest comes with the scientists who suck the government teat and have to keep the scare going to keep the funding going. And since the science is so flimsey the promotion has to be ongoing and intense. This is achieved through the evironmental movement which is a front for various political causes. Hansen of NASA/GISS is one of the egregious flim flam purveyors who is able to fool the likes of Cleitophon who reads everything and understands nothing. The Climategate emails illustrate how a small number of reprobates hijacked the research and over 30 years wasted billions of our taxpayer dollars on useless computer programs run on fabricated data in order to scare a whole generation of scientific illiterates/politicians and the MSM.

  • Bellerophon

    The results are in. Of the 4 temperature series available three report a sharp drop of 0.3C for 2010 and of course GISS/Hansen reports a sharp rise of 0.2C. This will be used by MSM to declare 2010 the hottest year ever!

    Keep in mind this origiator of the global warming scare was forced three years ago to revise many of his figures when it was discovered that wholesale “adjustments” had been made forcing pre-2000 temperatures downward and post-2000 figures upwards.

  • Bellerophon

    You will never get anywhere parroting drivel and poppycock. You must endeavour to get to the root of the problem lest you be branded a nitwit. Good luck in your future elementary school studies.

  • Bellerophon

    Food costs have risen 35% in third world countries according to the UN while another arm of the same institution ( IPCC) forces up energy(food) prices by CO2 bashing. It is MURDER by the left wing and they don't give a damn.

  • cleitophon
  • Bellerophon

    It is good you have a backup job now that you have been fired as an operative for GISS.

  • cleitophon

    Under different circumstances I think you and I could get along fine – your'e a funny guy :)

  • Dhouston

    this is precisely why when toyota and honda recently added back afternoon shifts that were cut at because of the recession/depression that all of the new workers hired were and are tempororay contract worker who were told not to expect to be hired full time any time soon as in maybe never. Car company's know this rising price will put the brakes on any expansion of car sales

  • cleitophon

    “low academic level of Cleitophon”

    Thats real funny!

    Unlike you I actually present theories methods and falsifiable hypotheses, whereas you have conspiracy theories and ad hominems:

    “twist things around as much as necessary to satisfy gullible puerile nincompoops “

    Please avoid personal attacks and stick to the issues.

    A subjective impression of local cold is hardly a serious challenge to qualifiable data that concerns all of the globe, from the galapagos islands to australia over alaska and other regions. Now if you can show data that supports a different trend for global temperatures I would very much like to see it. I am interested in truth not winning the argument for its own sake.

    In fact, with the troll like tone you have, I suspect you are a lobby paid debater that flames left right and centre in influential blogs to force certain issues.

    Why do you come here anyway – if you had read Jeff's book, you know he's not a sceptic on these issues: