Thursday, October 09, 2008

Artificially Mandated Demand Consequences - Redux

I’ve mentioned the fallacy of artificially mandated, by the state, demand for ethanol previously here, here, here, and here. Today one can additionally read of the consequences of the state’s mandating of ethanol use.

It’s one of the newest buildings in this small agricultural town. Aligned between two city water towers, the 120-foot long biodiesel plant gleams in the sun. The paint on its sign hasn’t even chipped.

But weeds have begun to encroach on the Great River Soy biodiesel plant, which produced just 94,000 gallons over two weeks before it ran out of money and was shuttered.

It’s a scene that has been repeated throughout the United States: Clovis, N.M. Nevada, Mo. Hartsburg, Ill. Lamoni, Iowa. Evansville, Wis. Greybull, Wyo. Rock Port, Mo. Belle Fourche, S.D. All were supposed to have biofuels plants operating or under construction by now. None do.

This week, another ethanol plant, in Pratt, Kan., declared bankruptcy. Prospects for another in San Pierre, Ind., have grown dim.

These consequences are not without humor, though, as can be seen in various so called ethanol industry experts’ comments.  Here’s one Kerry Rose, President of Ozark Ethanol waxing authoritatively eloquent.

"The market just exploded and got so crowded,” said Kerry Rose, the president of Ozark Ethanol, which has abandoned plans for plant near the Kansas border.

Brilliant analysis Kerry Rose.

And here’s David Swenson, a researcher at Iowa State University.

"It was a perfect storm of opportunity for the ethanol industry, and a perfect combination of every single element that they have counted on turning against them,” said David Swenson, a researcher at Iowa State University. “The infrastructure isn’t there and wholesale patriotic demand for ethanol didn’t materialize."

“Wholesale patriotic demand.” Yeah, that’s a real economic force, Mr. Swenson.

State mandated demand of ethanol use is simply an empty bushel presented by the state as if it is full of corn.

Biofuel plants hit economic road block

Posted by John Venlet on 10/09 at 11:13 AM
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