Warped Biofuels Policy?


An article in Sunday’s O suggests that biofuels refineries are looking at Oregon sites due to a combination of favorable federal and state tax preferences.

The result could be grain flowing into Oregon and fuel flowing back out.

What kind of policy do we need to get a biofuels industry that uses local biomass to produce fuel that gets consumed locally?


21 responses to “Warped Biofuels Policy?”

  1. I think its a terrible trend. I think Biofuel is an attempt to placate the environmentalists and there is no sound science behind it at all. So here we are trying to limit farmers from developing their land into something useful because we think that’s a threat to our “food supply” and at the same time more and more are using their abundant “cheap as dirt” land for instead growing for fuel and wine. The hill my house has been clearcutted of beautiful trees and now there are unsightly wineries all over it instead.

  2. Greg, we’re in agreement that biofuels should NOT come from food crops. However, there are other alternatives (e.g., cellulosic biomass) that may make a lot of sense. That’s why it’s so important to get the policy right.

    But I am amazed by your winery comment given your disdain for our land use planning system. Without the planning system, that hillside would undoubtably be subdivisions by now. While you may prefer the trees, I think you’re better off than you might have been!

  3. This is a prime example of why the Govt. should not be involved with choices like this. Let the market do it and the best result will come out.

  4. But I am amazed by your winery comment given your disdain for our land use planning system.

    Chris,

    I am actually very torn on the issue. I feel strongly about keeping open areas – I also feel strongly for property rights as well. Like I have said I am a 7th generation native Oregonian. My family was here before Portland was even a city and Oregon was a state! In my (short) lifetime I have seen Californians flock here and ruin the landscape with their nurseries, chip factories and wineries. A lot of small farming operations have disappeared to be replaced with California style nursery and corporate farming and wineries. Then those same people say the sky is falling and enact laws that prevent a lot of people who’ve been here a lot longer from capitalizing on their own property. Just look who one of the staunchest supporters of 49 is – a CALIFORNIAN who owns a winery who wants to ensure cheap land so he can continue to make a profit at the expense of everyone else. Sure the wineries and nurseries have no doubt helped us economically as a whole but I think individual farmers are getting a raw deal.

    Anyway back to the topic — I would like to see some of the cities around the area utilize plants like Water Hyacinth to soak up the sewage and then use the Hyacinth biomass for soil and producing methane. I think a centralized “bioswale” would be more economical and efficient than these ones they’re building in the middle of the streets. NASA did research on these aquatic plants back in the 70’s. They are the best natural filters known to man.

  5. From what I have read about ethanol and what environmentalists won’t tell you about ethanol is that it takes more energy to produce and transport ethanol (it can not be transported by pipeline due to its corrosive nature) than is derived from the end product itself. Furthermore, not only do ethanol producers receive public dollar financed subsidies and tax breaks, but even with just the current ethanol-gasoline mix required in Oregon, fuel consumption is increased due to a reduction of the miles per gallon used. Depending on the vehicle and driver, that can add up to as much as15 percent less per gallon for a more expensive product. Economically, the ethanol craze is a scam for consumers.

  6. et the market do it and the best result will come out.

    The market will produce a result that maximizes the short term return on investment. And, in the long run, the market seems to produce monopolies. That may or may not be “best”.

  7. What kind of policy do we need to get a biofuels industry that uses local biomass to produce fuel that gets consumed locally?

    A land use policy that doesn’t bog down industrial sites in years of negotiating tit-for-tat arguments with NIMBYs and urbanists that despise industrial uses for land (or at the minimum, want it located so far out of the way, that it becomes an enviromentalist issue.)

    I say a biofuel plant on the Zidell property is a good location – close to users and freeway access, and zoned industrial. Or near the Pearl District.

  8. I believe most biofuels plants are located close to raw materials. So they could easily locate in timber communities if wood pulp is an economical source.

  9. Ross Williams Says:

    et the market do it and the best result will come out.

    The market will produce a result that maximizes the short term return on investment. And, in the long run, the market seems to produce monopolies. That may or may not be “best”.

    Ross, can you name a few of these monopolies that have been produced in free, open markets in the long term?

  10. Ross, can you name a few of these monopolies that have been produced in free, open markets in the long term?

    Can you tell me where there has been a “free, open market”? The trusts of the 19th century did very well for themselves as monopolies. It is government intervention that prevents monopolies and little else. In fact the whole effort at branding is really a means of creating a monopoly. If you want the swoosh on your shoe, you have to pay Nike for it.

  11. Oregon is still more local than Saudi Arabia.

    I would like to remind folks that environmental benefits are not the ONLY benefits to biofuels.

    Of course I would like to see as much produced locally and consumed locally as possible.

    But as with most goods – that is not possible. Just try and buy a bicycle made in the USA…

    Still – as local as we can get is the best…

  12. “Just try and buy a bicycle made in the USA..”

    You’re kidding, right?

    First, Portland has one of the strongest centers for hand made bikes anywhere. Second, if you want a mass produced bike both Cannondale and Trek still make bikes here…as well as a ton of smaller firms.

  13. I can name some monopolies/oligopolies that developed over the long-term: AT&T (Remember Ma Bell?), Standard Oil way back in the day, Regal Cinemas right here in Portland, Oregon (I used to live in Phoenix where there are several chains and tix were $6 for an evening show when Portland was $8). Here’s another one that I’m using right now to operate my computer: Microsoft.

    Adam Smith warned in The Wealth of Nations that monopolies and oligopolies easily develop under capitalism and that the government is needed to ensure that it can bust up the monopolies.

    As a side note – I’d much prefer an electric car over ethanol. I imagine that the economies of scale have to be much better for a power plant to produce the same amount of energy to drive an electric car that I would need from ethanol to drive a car of the same mass (i.e. it’s more efficient to make energy at the power plant than to make ethanol to change to energy in my car’s engine).

  14. It seems to me those examples were really in the short term, not the long term as AT&T is hardly a monopoly power. I am using an Apple right now so Microsoft is no monopoly and I like Centuty theaters or DVD’s.

  15. This discussion reminded me of an old article by Dr. Edwin A. Locke:

    Hatred of the Good

    Multi-billionaire Andrew Grant was delighted. Since the year 2000, he and his staff of engineers and computer technicians had struggled desperately to successfully produce a revolutionary hovercraft car. Millions of man-hours of creative effort across a span of twenty years had at last come to fruition.

    The car was a technological marvel. Its air-cushion drive meant that it could travel safely over any type of terrain. It was light in weight and thus very fuel-efficient. Its patented spherical design supported by interlocking ribs composed of a new metal Grant had invented made the car exceptionally strong. This, plus a computerized laser detection system that automatically moved the car up, down or sideways if a collision were imminent, had cut by 90 percent the injury rate of people using his car.

    Grant’s car proved to be a brilliant success and enabled Grant Motors to gain a 60 percent, and growing, market share. Grant never sought publicity or acclaim, but he expected that his achievement would be appreciated. He was wrong.

    His “Big Three” domestic competitors, Titanic, Reliable, and Safe Motor Companies, had reacted with fury. They demanded an anti-trust investigation, claiming that, through a series of interlocking patents, technological innovations and high pressure sales tactics, Grant Motors had achieved an unfair stranglehold on the automobile market. An international consortium of foreign car companies demanded a monopoly ruling by the World Court. None of these companies mentioned that the reason Grant Motors was taking away their business was that people liked its cars better than theirs.

    The U.S. Automobile Dealer’s Association protested that Grant Motors was coercing them by requiring them to order Grant’s own anti-collision system with every car rather than installing a competing model. They failed to note that it takes two to trade, and that neither party is required to make a deal if they do not like the terms.

    The automobile unions screamed that Grant was causing unemployment as factory after factory owned by the Big Three was closed and union membership evaporated. They did not mention that for every Big Three factory that had closed a new, non-unionized Grant Motor factory had opened.

    The Green Earth Society warned that the air turbulence caused by Grant’s cars could conceivably cause global warming, global cooling, global flooding and global drought. These predictions were backed up by computer models based on “reasonable” assumptions. The society did not mention that there was no actual evidence for any of their claims.

    Automotive Magazine screamed that Grant’s patents were a public trust and therefore the patents should be given away to anyone who wanted them. They did not suggest that the copyrights to their magazine’s articles should also be given away.

    Professor Gerald Spookin, chairman of the Economics Department at Peoples University, wrote that Andrew Grant was another in a long line of “robber barons” who made his fortune by destroying the little guy and holding the common man in the vice-like grip of his monopolistic power. He did not explain how America could have become the wealthiest country in the world if its businessmen simply stole rather than created wealth.

    Senator Oswald Lunt, chairman of the Joint Committee on Anti-Trust and Monopoly, went on TV to announce, “We will immediately begin hearings on the anti-competitive implications of the fact that Grant Motors is so successful, er, that is, dominant.”

    Fantasy you say. But was our fictional Andrew Grant treated any better than John D. Rockefeller, or Andrew Carnegie, or Bill Gates? There is only one fundamental reason why great businessmen or great companies are hated, and it has nothing to do with so-called monopolies. They are hated, as Senator Lunt let slip, because they are good, that is, smarter, more visionary, more creative, more tenacious, more action-focused, more ambitious, and more successful than everyone else. Haters of the good do not want the less able to be raised up to the level of the great producers (which is impossible); they want the great producers to be brought down. They want to use government coercion to cripple the greatest minds so that lesser minds will not feel inferior.

    Government coercion against the productive is a clear violation of their moral right to trade freely with other men. Furthermore, depriving great minds, such as that of Bill Gates, of their right to economic freedom also deprives the rest of us of what they could produce. The freer such people are to function, the richer we all will be.

  16. I think certain industries do better when they ARE monopolized. Take utlities for instance… Do you really want to have multiple companies operating and have multiple sets of power lines everywhere for each competing company? I also think telecoms. are better monopolies. Having worked in I.T. I know the complexity of interconnects, companies blaming each other for why something is broken, etc. I think transit should operate the same way – as a monopoly with government oversight but NOT the actual government running it. I think Health Industry would also work better as a monopoly with oversight like utilities are.

  17. nwjg Says:

    It seems to me those examples were really in the short term, not the long term as AT&T is hardly a monopoly power. I am using an Apple right now so Microsoft is no monopoly and I like Centuty theaters or DVD’s.

    Stockguy replies:

    How much market constitutes a monopoly? If it’s over 90% I’d say that Microsoft applies. I’d also say that Regal Cinemas probably has 90% of the market share of the Portland movie ticket sales. Also, you didn’t closely read the part of my message about AT&T. I wrote “Remember Ma Bell”? At one point AT&T controlled almost the entire long distance and local phone service in America. A federal judge broke up the company in the early 1980s.

    Just look at Microsoft’s profit margins and return on equity. The company has a virtual monopoly on business computers (I’m not in graphic design, but try walking into a bank and finding a Mac).

  18. i worked for microsoft, doing boring paralegal stuff for sun v. microsoft.

    trust me. they are a monopoly. and everyone has suffered because of it.

  19. “How much market constitutes a monopoly? … I’d also say that Regal Cinemas probably has 90% of the market share of the Portland movie ticket sales.”

    Regal does not do that well in Portland, the big problem they have is that everyone knows that you can pay $9 to see a movie there, or you can wait a few weeks, and pay $3 and drink beer at any number of other theaters in town…

  20. It seems to me those examples were really in the short term

    That’s what happens when government breaks up monopolies.

    This discussion reminded me of an old article by Dr. Edwin A. Locke:

    No doubt. You can explain anything once you have adopted ideological faith.

    I am using an Apple right now so Microsoft is no monopoly

    Microsoft doesn’t make computers.

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