5 Comments
Apr 19Edited

From a raw energy point of view, ethanol is a loser.

But it makes more sense (for now) because of the different energy-forms of the input and output for the process. And the peculiarities of the North American vs global commodity availability & transport.

The input for the important fertilizer and distillation parts of the corn-ethanol process, is natural gas. Natgas is abundant on the continent, and a key attribute of fracking is the short time-scale. Fracking dumps out most of its value in the first 2 years. Thus it is easier compared to traditional oil/gas investments, to both ramp up and ramp down to follow demand in medium term.

The cost of natgas at the wellhead in North America is also tiny, due to the super-producing dry-gas ends of the shales. Most of the attention is focused on the wet ends of the geology, because dry gas is just not worth much. The reason it isn't worth much is because connection to the global market is limited by lack of intercontinental LNG transport. That lack is structural, the transport infrastructure is slow to construct and energetically inefficient anyway.

The output of the corn-ethanol process, on the other hand, is a liquid motor fuel which due to substitution is price-connected to the global market.

So until such time as NEV's displace ICE in North America, there is a logic to it. The side effect of discouraging US investment in EV's is all the more true because of this.

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" If we want manufacturing to truly be globally competitive, we need to make real structural changes, the kind that hurt. If they do not hurt, it probably just means they weren’t enough."

Indeed. But how? How can such policy be anything but political career destroying, never mind vote winning? Blessed with "Privilège exorbitant" which you wrote about on Fool's Day, why build when you can print? Or should the "Printing Press Disease" be added to the diagnostic?

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That is the $64 trillion question.

You are right: Political realities create selection bias that manifests both on the politican and policy side.

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Then doesn't it follow that there is no cure any time soon primarily because of the "Sacred Cow Disease", aka Democracy: a pathetic belief in the collective wisdom of individual ignorance (HL Mencken)?

David P Goldman calls for a, and quotes precedence in the, "Manhattan Project". But why wouldn't it take WW3, or alien invasion e.g., to bring about?

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Perhaps because people are too comfortable. Quality of life is truly very high. And the threat is inflated. The U.S. is extremely secure defensively. This makes it hard to upset the status quo (and there are also entrenched economic/political forces tied to the status quo that make it hard to change).

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