Ethanol's under the microscope, and oil refinery bankruptcies go unnoticed

In a recent interview, Charlie Drevna of the National Petrochemical Refiners Association made this comment about today’s ethanol market: “With the failure of a number of ethanol facilities and even their corporate entities last year, it's becoming even more apparent that the RFS (Renewable Fuels Standard) never was a good policy to begin with, and that efforts to prop up those businesses with decades of federal subsidy were essentially for naught.”

Given the fact that a number of oil refineries have also recently declared bankruptcy, I wonder if Charlie thinks using gas in our cars is bad policy too?  What about the efforts to prop up those refiners by spending billions of unreimbursed defense dollars to get their oil products imported from the Middle East and other similarly bad places?  Frankly, that seems like an easier case to make.  If you’re looking for bad policy, how about the unwritten policy that sends hundreds of billions of hard-earned U.S. dollars to other countries to pay taxes and create jobs there rather than here?

But more importantly, some of you are thinking, “Refinery bankruptcies?  Huh?”  It’s true.  Refineries many times larger than even the largest ethanol producers have filed for Chapter 11 bankruptcy in the past few months, and many other refineries are cutting back production – yet we don’t read or hear a thing about it in the media. 

Posted by RL, 1/26/09

Comments

[mus302]

I have noticed the same thing. These are tough economic times and there are individual companies within every industry that are suffering. Ethanol is no different. But what is different is the fact that the press sees those struggling ethanol companies as a sign that the industry is on the brink of failure. As you point the same is not said for petroleum refining industry. Same for other industries. When Pilgrims Pride filed bankruptcy did the press say that it was a sign that the chicken industry was on the brink of failure?

And I think every industry group is at the moment making suggestions to the new administration for ways to boost their industry through the upcoming stimulus bill. For the ethanol industry that is seen as sign that they are looking for a bailout. But it has not been seen that way for other industries doing the same thing.

I think the difference is that other industries don't have the Grocery Manufacturers Association waging a marketing campaign against them. I think that representatives of this marketing campaign are always there to help the press to see events withing the ethanol industry the way they want them to be seen.