Ethanol, the highly touted gasoline blend, born during President George W. Bush’s second term, which was Congressionally mandated at ever higher annual usage levels, as a major component of the White House’s “renewable energy” commitment, has run into increasing trouble.
In the current setback of lowered demand and cost overruns, the monkey’s back of ethanol’s salvation is once again being requested from U.S. taxpayers during the recent past. They have already seen the renewable energy fallacy absorbed in the crony capitalism of solar panels, and the attempt to get wind power off the ground.
Ethanols’ travail, complicated by an increasingly rising component of each gallon of gasoline sold in the U.S., has been further sandbagged by lowered total gasoline usage. Even after the official end of the 2008-10 financial calamity, and the soaring cost of corn, which ethanol’s production helped to create greater energy efficiency has reduced gasoline volume. Now ethanol is caught in the further squeeze of mandates for the use of alternative fuels, which were expected to emanate from “bio-fuels,” but these haven’t even gotten off the ground. Instead, the nation’s refineries have turned to imports of cane sugar-based ethanol from Brazil, which has become competitive despite a 50 cent import tariff for every ethanol-based gallon.
This 2007 Congressionally-passed law to encourage production of non-corn-based alternative blends was supposed to increase every year, in order to encourage “advanced” bio-fuels. This was intended to wean U.S. refineries away from corn, as world food shortages, as well as cost increases, were found to be directly attributable to the production surge of corn-based ethanol.
Now, as the corn-based U.S. ethanol refinery shutdowns are on the increase, the domestic Renewable Fuels Association is crying foul. It is asking the Environmental Protection Agency, which is managing this mess, to reverse the bio-fuels component which is impinging on the already decreasing demand for the overall additive. Previously, EPA had qualified Brazil’s sugar cane ethanol as a stand-in for the “advanced fuels additive,” over the objections of the corn-based ethanol lobby.
In 2012, almost 92% of the advanced fuel additive category that counted toward the quota was imported from Brazil. In the meantime, the hope that ethanol could be produced from corn stalks, or wood chips has not materialized in large enough quantities to fill the “Made in U.S.A.” gap.
Meanwhile, the EPA is finding itself in a situation of its own limitation. It was directed by its own written statement that sugar-cane fuel creates fewer greenhouse gas emissions than traditional fossil fuels, and is at least as “environmentally-protective” as corn ethanol. This quixotic muddle is another sad example as to how U.S. legislators, as well as the White House, are contorting energy production, among other sectors, in getting further away from the traditional American, cost-effective, supply demand and capitalism.
With the advent of Obamacare’s full extent and ever stiffer financial regulations making themselves felt, independent businesses are restoring two significant steps to maintain their viability and maximize whatever profit can be protected from the present regulatory squeeze:
1) Part-time, temporary workers, already a growing methodology appearing on the post recessionary scene are being supplemented with external contractors to manage situations that don’t require payroll and benefit participation.
2) An acceleration of whatever technology can sustain business levels, and even growth, while displacing the need for full-time employment, whether on the shop floor or in the back office.
Our previous columns on the intensifying use of “robotics” indicate that the “age of the robot” is only in its infancy at this time. It will likely accelerate its intensity under the aegis of present business circumstances.
Although capital spending on the whole, including that for Defense and aircraft, remains generally subdued, that segment dedicated to production equipment and software has picked up substantially in the last three months.
This principal of unintended consequences is accelerating in reducing the use of full time personnel in positions being replaced by hundreds of thousands of independent companies. However, countering this trend is the greater competitiveness of America’s business and industry, which is in the early stages of “insourcing.” This is the homecoming of jobs in manufacturing and services that were lost in rapid outflow during the past 20 years.
However, the upward ratcheting of hostility toward the Administration that is perceived as universally hostile toward independent businesses in particular, is acting as a deterrent for expansion.
The general tone of the many business contacts with whom I stay in touch is one of watchful waiting, and an intense preservation of the status quo. Until and if the nation’s political leaders wake up to the fact that “wealth redistribution” is primarily cut out of the hide of “small business,” the 80% of potential U.S. employees who depend on such businesses for jobs, will find themselves harassed by the Obamacrats’ ongoing business constraints.
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