More Taxpayer Money down the Ethanol Rathole

In its December 19 issue, Chemical and Engineering News reports that a joint venture of Mascoma and Valero will build an ethanol plant. The ethanol will be manufactured from cellulosic raw materials, which is a favorite of the Obama administration.

However, you will recall from my previous writings that ethanol cannot compete cost-wise with gasoline, without a continuing taxpayer subsidy on the ethanol produced. In addition, the new joint venture plant will be financed by an $80 million "cost-sharing agreement" from the Department of Energy and a $23.5 million grant from the state of Michigan.

Here we have not only the Federal Government using taxpayer money to put down the rat hole of renewable energy, but also now the state of Michigan. This operation obviously does not make basic economic sense, when compared with the availability of low-cost gasoline from crude oil. It only becomes competitive when supported by taxpayer funds. The motivations are ideological considerations of the Obama Administration and individuals who want to develop new jobs for themselves at taxpayer expense.