IS GM'S ETHANOL BET GOING TO GO SOUTH?

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IS GM'S ETHANOL BET GOING TO GO SOUTH?

E85.

That’s the mantra at General Motor these days.

Not only do they want to make cars that run on it, they want to make the oil companies sell it to you. If the oil companies won’t cooperate, then they’d like the federal government to force it on them.

But, could it be a huge mistake?

That’s the suggestion that comes from two distinguished reports, one in the journal Science, authored by scientists at Princeton and Woods Hole Research Center, and the other from the University of Minnesota and the Nature Conservancy.

Guess what?

Ethanol contributes more to greenhouse gases than gasoline.

That’s what they say.

(more after the jump)

Corn based ethanol, it seems, releases a lot of carbon when land is cleared to grow the corn, and it takes away the “carbon sinks” that absorb carbon.

So, to break even on greenhouse gases from making corn-based ethanol, it’ll take about 150 to 400 years, depending on the locality.

Yup, as much as four centuries.

In other words, the world would be better off with gasoline.

Of course, General Motors has an answer. They’ve got this plan whereby ethanol can be produced from waste, such as old tires, rather than from corn.

Coskata.

That’s the name of the company that promises to create the miracle.

Pilot plant is supposed to be up and running this year, and then the big volume plant goes on line the year after.

General Motors has a lurid history of making money, albeit not recently.

In 1952, President Eisenhower appointed Charles Wilson, the president of General Motors, as his defense secretary. Within the next couple of years, an interstate highway system was adopted, one ostensibly designed to speed the movement of goods to ensure adequate national defense. (That’s right – the interstate system was promoted back then as a national defense measure.)

And within a few years after that, Dinah Shore made “See the USA in your Chevrolet, America’s Asking You to Call” into the real national anthem.

GM ended up owning half the car market, and having to restrain itself from having more, so that the government wouldn’t break up the company under the antitrust laws.

Now they’re doing it again.

Ethanol.

They’re not fools at GM. They didn’t decide to build the roads, nor did they invest in the construction companies that did build the roads. They just made the cars that ran on the roads, the commodity with the largest profit margin.

Now, they’re doing it again.

The new energy bill mandates ethanol. It also mandates non-corn based ethanol, which is a license to steal for a company like Coskata, GM’s latest romance.

36 billion gallons by 2022 – perhaps, not coincidentally, two years after the new CAFE regulations are in full effect – that’s what the energy bill requires in ethanol production.

But, then, you ask:

If it is such a good deal, why isn’t GM putting its own money into Coskata?

One would think that a company that lost over $30 billion last year would be anxious to have a profit opportunity.

But, it doesn’t seem to be working it that way.

At least, that’s the theory.

But, perhaps there’s more to the story.

Coskata will have to run the risks and prove the point.

But, where it comes down is in the fine print.

Wouldn’t GM love to own the fuel company, too?


3 comments:

Well owning a fuel company requires a lot of money and resources.

That’s right. It better to keep shipping our money to Saudi Arabia instead of wasting it on American farmers.

Let me get this right…we are going to run out of oil. We make tires from oil. If we make E85 out of old tires. When oil runs out, no more tires hence no more E85…ah crap what were we thinking!? Yeah, I bet there is a lot more to it. As a matter of there is! Now maybe I just don’t understand this well, but I am sure that I remember reading last month (and I now quote from , from STL Post-Dispatch 01/14/2008) U.S. President George W. Bush signed an energy bill that requires the use of 36 billion gallons of ethanol by 2022, with 15 billion gallons made from corn and other grains U.S. petrol consumption is at 869 million gallons a day as of 2006…you do the math. And where does the “150 to 400 years” thing come from?

Now, if you knew about Charles Wilson you would know about his rather extensive background concerning his nations defense. He was the Secretary of Defense, but don’t try and stretch it. You make it sound like its some kind of “military industrial complex” conspiracy…but hey maybe its just me.

So, now that you have gone there, are you saying that General Motors is trying to take over the world? If “they’re doing it again”, are you insinuating that there is an ongoing conspiracy at GM that has spanned nearly half a century or more? Maybe they have Charlie Wilson’s head in a jar commanding from the GM board room.

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