The End of the Ethanol Hoax

Well, I’ll be doggoned. I never thought I’d see such outspoken opposition to ethanol from such unlikely sources – such as many of the politicians who helped create this monstrous and expensive fraud in the first place.

Last Friday, a group of Republican senators, including presidential candidate John McCain, urged the Environmental Protection Agency to hold off enforcing legislation to increase ethanol production. There goes the Farm Belt vote!

Even the August New York Times – which has never failed to support a government solution to every real or perceived problem on the planet – now says “it is time to end an outdated tax break for corn ethanol.” Will wonders never cease?

All I can say is, it’s about time. It may not be true that ethanol will ultimately be recognized as “the largest scam in our nation’s history,” as one energy expert has declared. (See Gusher of Lies by Robert Bryce.) But any objective review of the facts will force one to concur with economist Walter Williams, who wrote that “politicians, corn farmers, and ethanol producers know they are running a cruel hoax on the American consumer. They are in it for the money.”

Think that’s too harsh? Let’s look at the facts.

Far from being energy efficient, ethanol may be the most energy inefficient fuel ever devised. First, corn is expensive to grow. It takes 1700 gallons of water to produce the corn to make one gallon of ethanol. Next, ethanol is expensive to ship. Because of its high water content, it corrodes pipelines. Thus, it must be carried to its destination by truck or rail.

By the way, this same high water content means ethanol will also cause more damage to automobile engines than regular gasoline – something to consider the next time you fill up. Ethanol is also 20-30% less efficient than gasoline, thus making it more expensive for every mile you drive.

When you consider everything necessary to produce one gallon of ethanol, it turns out that it takes more than a gallon of fossil fuel (oil and natural gas) to do it. Is that absurd, or what?

It’s no wonder that ethanol requires massive government subsidies for those who produce it – and government mandates to force us to use it. This year, ethanol subsidies amount to 51 cents per gallon. With seven billion gallons of ethanol scheduled to be produced this year, that is a $3.5 billion pot of payola for the hucksters.

No wonder that more than 30 million acres of U.S. farmland are now devoted to ethanol production. That means fewer acres to grow wheat, soybeans, or other crops – and thus higher prices for those grains, too. Of course, when grains go up, so do hundreds of other products, from bread and beef to chicken and cheese.

The insanity of our ethanol policies also means that U.S. food exports are declining – and the prices for everything we do send abroad are climbing. When the price of corn doubles in the U.S., so does the cost of tortillas in Mexico. When we begin rationing rice (as Costco and Sam’s Clubs did recently), it means there is less to sell abroad. (Did you know that the United States is the fourth-largest exporter of rice in the world? Until I began researching this piece, I didn’t.)

Current law will require the U.S. to produce (and us to burn) nearly five times more biofuel by 2022 than we do today – from 7.5 billion gallons to 36 billion gallons. Some 33 new ethanol plants are under construction today, with 60 more on the drawing boards, to meet these requirements.

But it ain’t gonna happen, folks. For once in my lifetime, the truth (that ethanol is an expensive fraud) is catching up with the lie. Even stricter government mandates and more expensive government subsidies won’t be enough to force this absurd concoction down our throats … or in our gas tanks.

It may be too early to celebrate victory for the free market – Uncle Sam will undoubtedly mail out millions more subsidy checks before that happy day arrives.

But I’m happy to report the ethanol tide is definitely turning.

I Miss Mitt

I didn’t think it would happen, but I’m finding myself less and less entertained by this year’s race for the White House. I’ve gotten tired of the juvenile sniping between Hillary Clinton and Barack Obama. I’ve grown weary of the pious pontificating of the talking heads on television. More and more, I’m reminded of Queen Victoria’s stern declaration, “We are not amused.”

That’s why it was so refreshing to hear a former candidate demonstrate a healthy sense of humor about his failure to win his party’s nomination. At the Radio and Television Correspondents Dinner in Washington, D.C. last month, Mitt Romney shared his “Top 10 Reasons for Dropping Out of the Race.” In case you missed them, they were:

10. There weren’t as many Osmonds as I thought.
9. I got tired of corkscrew landings under sniper fire.
8. As a lifelong hunter, I didn’t want to miss the start of varmint season.
7. There wasn’t room for two Christian leaders.
6. I was upset that no one had bothered to search my passport files.
5. I needed an excuse to get fat, grow a beard, and win the Nobel prize.
4. I took a bad fall at a campaign rally and broke my hair.
3. I want to finally take off that dark suit and tie, and kick back in a light-colored suit and tie.
2. Once my wife Ann realized I couldn’t win, my fundraising dried up.
1. There was a miscalculation in our theory, “As Utah goes, so goes the nation.”

Okay, I’ll grant you, he probably had some help from the speechwriters on his staff. Still, this is pretty funny stuff – especially when you consider how stiff and rigid Mr. Romney appeared during most of his campaign appearances.

After hearing one of the stories he told on himself during the campaign, I should have known there was a healthy sense of humor underneath that polished exterior. Mitt related that he once asked his wife if, in her wildest dreams, she ever thought she’d be married to someone running for the presidency of the United States. “Honey,” he said she replied, “you weren’t even in my wildest dreams.”

This Week in History

It was 120 years ago this week that America’s most prolific songwriter was born. Israel Isidore Beilin – who became much better known as Irving Berlin – was born in Mogilev, Russia (in what is now Belarus) on May 11, 1888. The future composer was five years old when his parents moved to New York.

When his father died when he was eight, Berlin took on many menial jobs to survive, including selling newspapers and bussing tables. He was working as a singing waiter in Chinatown when the proprietor asked him to write an original song for the restaurant. “Marie From Sunny Italy” was the result. When it was published, it earned the writer the princely sum of 37 cents. It not only launched a new career for him, it also gave him a new name, when Israel Beilin was misprinted I. Berlin on the sheet music.

Although he could not read music and could barely play the piano, Berlin went on to compose more than 3,000 songs, including “God Bless America,” “White Christmas,” “There’s No Business Like Show Business,” and numerous other hits. His first #1 song was “Alexander’s Ragtime Band.” When it was released in 1911, four different versions took the top four spots on the best-seller list. “Alexander’s Ragtime Band” later went on to top the charts in four successive decades -- 1927 (recorded by Bessie Smith), 1937 (by Louis Armstrong), 1938 (by Bing Crosby), 1947 (by Al Jolson), and 1959 (by Ray Charles).

After World War II, Berlin turned his attention from writing songs for Tin Pan Alley to writing shows for Broadway. His first musical, Annie Get Your Gun, opened on Broadway in 1946, starring Ethel Merman and produced by Richard Rodgers and Oscar Hammerstein II. Berlin went on to compose 16 other musicals.

Berlin also wrote scores for the movies, including Holiday Inn (1942), Blue Skies (1946), Easter Parade (1948), and Annie Get Your Gun (1950). The film version of a musical he wrote when he served in World War I, “This Is the Army,” featured Berlin himself singing “Oh, How I Hate to Get Up in the Morning.” It also introduced one of his most popular songs, “God Bless America.”

The 1942 film Holiday Inn featured Berlin’s most-recorded song, “White Christmas.” The first recording by Bing Crosby sold more than 30 million copies. The song’s immense popularity led to a second movie, White Christmas, which was released in 1954. Berlin won an Academy Award for “White Christmas” – one of seven Oscar nominations he received. He is the only presenter in the history of the Academy Awards to read off his own name when he opened the envelope to announce the winner in the Best Song category.

It’s hard to dispute the tribute paid him by fellow songwriter Jerome Kern, who said, “Irving Berlin is American music.” Today most schoolchildren have never heard of America’s most successful songwriter. But they know all the lyrics to Gnarls Barkley’s songs.

Some would say this is not an improvement.

Until next time, keep some powder dry.

Chip Wood

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Straight Talk is a weekly commentary written by Chip Wood.
For many years Chip was the host of an award-winning radio
talk show in Atlanta, Georgia. He is the founder of Soundview Publications and serves as an MC at several investment conferences. His weekly rants and raves are free for the asking
at www.straighttalkletter.com.

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