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Thread: new Ethanol studies anger farmers and rich New Yorkers / Californians

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    Banned Melonie's Avatar
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    Default new Ethanol studies anger farmers and rich New Yorkers / Californians

    (snip)"We’ve entered another ugly battle in the ethanol wars. The EPA released an analysis last month purporting that corn-based ethanol is actually worse for the climate than gasoline on a lifecycle basis, and the California Air Resources Board (CARB) released a ruling that will effectively exclude corn-based ethanol from California’s Renewable Fuels Standard for that reason.

    The ethanol industry and its supporters are livid. House Agriculture Chairman Collin Peterson (D-MN), a longtime ethanol supporter, threw a fit during a recent hearing and now is threatening to block climate legislation over the new rules. "I don't care,” he exclaimed during a hearing over EPA’s draft rule, “Even if you fix this. I don't trust anybody anymore -- I’ve had it." Ethanol opponents are cheering the agencies' decisions and urging them to look at ethanol under worst-case scenarios."(snip)

    (snip)A quick primer on the latest wrinkle from the EPA and CARB: Both reached damning conclusions about the impact of ethanol based on complex economic modeling, but the basic logic behind their analysis is simple:


    • Using farmland for ethanol diverts land from being used for food production, driving up price and demand
    • Higher prices and demand encourage farmers in the developing world to plant more crops
    • Developing world farmers clear and burn forests so they can plant more crops
    • Clearing forest for cropland releases a tremendous amount of greenhouse gas
    • Thus, devoting cropland to ethanol production leads to increases in greenhouse gas emissions

    The ethanol industry and its supporters don’t dispute this logic, but claim two problems with the agencies’ approach: (1) The science behind this economic modeling is too new and imprecise, and (2) biofuels are being held to a much tougher standard than other climate solutions. Their opponents hold that the science is sound, and that other low-carbon technologies simply don't have these massive "indirect land-use" problems."(snip)


    Of course the rich New York and California 'investors' are unhappy because their tax credits are now in jeopardy ...

    (snip)"Ethanol plants are classified as “manufacturers” and, as a result, are eligible to participate in unique federal and state tax incentive programs, particularly in the first year of operation. Tax credits are more valuable than equivalent tax deductions. A tax credit reduces tax dollar-for-dollar, while a deduction is based on a percentage of tax. The following is just a sample of the myriad credits out there.

    Alternative Fuels Tax Credit
    Available to U.S. ethanol producers is the small producer ethanol credit. This credit will benefit small “agri-producers” by giving them a 10-cent-per-gallon tax credit for up to 15 MMgy. In addition, the limit on production capacity for small ethanol producers increased from 30 MMgy to 60 MMgy. This is effective until the end of 2010.

    Cost Segregation
    Every year, thousands of commercial property owners overpay because they are unaware of the tremendous federal and state tax savings hidden in their buildings. Those lost profits can quickly amount to hundreds of thousands of dollars in just a few years.
    Construction-related or building acquisition costs are commonly lumped together as real property with a depreciable life of 27.5 or 39 years. This means annual depreciation deductions are spread over that time frame.

    The goal of a cost segregation study is to identify all direct and indirect costs that qualify for shorter depreciable lives. Reducing tax lives to five, seven or 15 years results in an opportunity to significantly reduce a producer’s current tax liability and free up operating capital for other uses. "(snip)

    from

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    Default Re: new Ethanol studies anger farmers and rich New Yorkers / Californians

    My dad and uncle own an independent garage working mostly on foreign cars. Since Ethanol was added to the fuel in most branded stations in Indy, they have seen a rise in contaminated fuel systems coming into the shop. They have seen sales of fuel filters double in the last few years. (Good for them, bad for consumers.) According to my dad, Ethanol is a solvent that breaks off rust, corrosion, gum and varnish in the fuel tank. The contaminants then flow down the fuel line to the fuel filter. Hopefully for your car, the filter catches the contaminants and allows only clean gasoline to pass. Once the filter collects enough contaminants, fuel flow is restricted to such a point that the car starts to run sluggishly or even dies. At that point the customer comes into the garage where my dad or uncle will replace the fuel filter for a fee. If, and that's a big if with those two, they like you, they will recommend you start using cheap unblended fuel. If they don't like you or they have boat payments looming, they won't say anything. Repeat business, it's the best kind.

    Z

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    Default Re: new Ethanol studies anger farmers and rich New Yorkers / Californians

    LOL @ boat payments/repeat biz

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    Default Re: new Ethanol studies anger farmers and rich New Yorkers / Californians

    granted that 10% ethanol blends have been responsible for all sorts of 'mechanical' problems with engine fuel systems. But the real point of the recent EPA announcement, and even more so the CARB announcement that will lead to the exclusion of corn based ethanol from California's approved alternative fuels list has little to do with the fuel, it's performance, or it's true environmental impact. What DOES matter a whole lot is the fact that the generous gov't tax credits / tax deductions / accelerated tax write-offs etc. associated with ethanol production are being threatened.

    To understand the relative importance, one must be aware that investing in ethanol production facilities ... in the form of farmland for corn, in the form of ethanol refineries etc. ... generates a 10 cent per gallon production tax credit which the investor can then use to directly cancel out taxes due on income from other sources. This production tax credits bypasses Alternative Minimum Tax limits on other tax deductions.

    As such, a large number of uber-rich / high income residents of high tax rate states ( particularly NY and CA ) have used ethanol investments as a means of drastically reducing their actual tax bills. As federal and state proposals intend to further increase the 'published' tax rates that apply to the 'rich', the 'value' of ethanol investment as a tax reduction scheme only increased. As a result, a situation exists where ( to cite just one example) one of the largest individual owners of corn farm acreage in Iowa is now Manhattan's David Letterman ! God only knows how many 'rich' New Yorkers and Californians are partners in 'private equity' owned corporate farms / ethanol distilleries - enabling them to receive a portion of the production tax credits generated without having their part ownership become a matter of public record.

    However, as a result of these recent ethanol 'disclosures', the listing of corn ethanol as a 'green fuel', and the tax breaks that go along with it, are now in jeopardy. If that happens, all of a sudden there are going to be a whole lot of 'liberal' investors in NY and CA who find they are sitting on a rapidly declining investment. But much worse will be the fact that the loss of their ethanol production tax credits will again expose their 'regular' incomes to actual full taxation ! This will constitute a nasty double whammy !

    ~
    Last edited by Melonie; 06-07-2009 at 09:08 PM.

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    Default Re: new Ethanol studies anger farmers and rich New Yorkers / Californians

    Ethanol does cause engine problems. More with older than newer engines for the reasons listed above. If used in a clean, well maintained engine it's downside is negligible.
    However it is incompatible for marine use and for most airplane engines because it absorbs and attracts water and can easily cause the fuel line to freeze.

    To run on more than 10% ( as they do in Brazil ) engines must be modified.

    The BIG problems with ethanol are the diversion of cropland from food to fuel; conversion of jungle and wetlands to cropland and the energy needed to make ethanol. It's just NOT energy or carbon efficient.

    What we really should be doing is expanding our use of natural gas. Especially in cars and trucks.
    Last edited by Eric Stoner; 06-11-2009 at 08:28 AM.

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    Default Re: new Ethanol studies anger farmers and rich New Yorkers / Californians

    Burning forests is a double-edged sword so to speak.

    Slash and burn releases tons of CO2 and particulates into the atomosphere, but resulting deforestation reduces the amount of CO2 absorbed by forests, which previously served to balance out excess CO2 produced by other natural causes and to an extent man-made CO2 at levels of 50 years ago and before.

    Autos get less mpg when ethanol constitutes 10% of fuel by volume.

    Methanol is used as a water abrsorbent in fuel since it emulsifies water in the gasoline, as long as the amount of water is not great. Ethanol does the same thing to a different extent, as long as ethanol (or methanol) do not themselves contain large amounts of dissolved water.
    Last edited by threlayer; 06-20-2009 at 08:27 PM.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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