Ethanol Production and Profits Are Through the Roof
Corn ethanol production has soared to record heights this year, and with large harvests and low corn prices, that means record profits for the industry. Yet even with ethanol refiners making money hand over fist, the industry still claims it needs a government mandate to stay afloat.
The Energy Information Administration reported last week that corn ethanol reached a record production rate of almost a million (982,000) barrels a day during the week of November 16. Production has soared in large part because of low corn prices, making ethanol cheaper to make, even though the price of ethanol remains consistently high. This means the multi-billion dollar ethanol industry will also make record profits this year.
The intent of the federal Renewable Fuel Standard was to help biofuels producers get established in the market. The hope was that government support would result in greener fuels than gasoline, such as fuels made from prairie grasses or waste material from agriculture or elsewhere. In reality, the policy has delivered a surge of corn ethanol, which is worse for the climate than gasoline, and only a trickle made from greener feedstocks.
The surge of corn ethanol has also contributed to the conversion of more than 8 million acres of sensitive American prairie to grow corn. The land conversion destroyed habitat for several species of migratory birds and released millions of tons of carbon into the air, contributing to the warming climate.
It’s clear that the multi-billion dollar corn ethanol industry is solidly established, destructive to the environment and should not be mandated by federal policy.
The recent announcement that the Obama Administration won’t be updating the ethanol mandate this year may signal a recognition that the Renewable Fuel Standard is unbelievably off track and in desperate need of a legislative fix. Let’s hope so.