Column for week of August 18, 2014 Please buckle your seatbelt before reading this column. It will be a wild, twisted ride. The US government forces the use of ethanol in vehicle fuel. It also subsidizes production of ethanol. That same government also placed a hefty tariff on imported ethanol. The reason for the tariff is to protect the US producers of expensive corn based ethanol from less expensive ethanol made from sugarcane grown in the tropics. Sugarcane can be grown much more efficiently in the tropics than in the US. That tariff also protects drivers from lower fuel prices. The government also uses tariffs and quotas to block the importing of sugar. Government actions make sugar cost about twice as much in the US as in the rest of the world. This is purely a ripoff of sugar users for the benefit of the powerful sugar producers' lobby. Everything so far is simply government granting favors to powerful special interests. In other words, government doing what it does best. Imagine my surprise when I saw a headline about a Nebraska ethanol plant giving up on corn and producing ethanol from sugar. How could it pay to replace corn with expensive sugar? Why did the government even allow its favorite sweetener to replace its favorite grain? Confusing matters even more, I discovered that the ethanol plant was buying its sugar from none other than the government of the U.S. of A. Why does the US government have sugar to sell? Obviously I haven't laid out the complete story yet. The US government buys sugar to keep the price high. That can work. Should sugar buyers say "Thank you?" Won't the government's sale of sugar defeat its purpose for buying the sugar? Not necessarily. Government sells the sugar for nonhuman consumption. I am all but certain that most ethanol plants are nonhuman. Of course, the limit on the use of the sugar makes it sell at a lower price. Apparently that price is so low that it makes sense, and dollars, to make ethanol from sugar. The government selling food for nonhuman consumption is nothing new. While in grade school I read about the government buying potatoes, dying them blue, and selling them for nonhuman consumption. Some things never change. Let us consider some of the consequences of all this intervention in the market. The artificially high price for sugar motivated sugar users to seek less expensive alternatives. This made corn syrup the preferred sweetener for soft drinks and many other products. At least it is preferred by the manufacturers. Not all consumers are on board. The claimed health hazards of high fructose corn syrup do appear to be over blown. Consider that the sweetener in honey is identical to high fructose corn syrup. Unscrupulous honey sellers mix corn syrup with honey. Also, when the body digests sugar the first step is to break the sugar down to the molecules that make up corn syrup. Now sugar is replacing corn in the manufacture of ethanol. Obviously that displaced corn can be used to make corn syrup. The corn syrup can replace the sugar displaced from soft drinks. Instead of cars powered by corn and people powered by sugar, we will have cars powered by sugar and people powered by corn. I stand in awe of yet another miracle worked by government. The net effect is the taxpayers are paying double the free market price for their sugar. Then they are taxed to subsidize sugar purchases for an ethanol plant. What a sweet deal. Does anyone besides politicians, bureaucrats and lobbyists benefit from the scheme concocted by government? I give government too much credit. It didn't concoct most of the scheme. Many of the results were the accidental byproducts of politicians and bureaucrats fiddling with things they didn't half understand. In other words, It was just a normal day's work in D.C. aldmccallum@gmail.com * * * * * * * * * * * * * * * Copyright 2014 Albert D. McCallum
Considering the issues of our times. (ADM does not select or endorse the sites reached through "Next Blog.")
Monday, August 25, 2014
How Twisted Can It Get?
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