Tuesday, June 28, 2011

Iowa Indy Corn 250 and the Ethanol Boondoggle

A departure from the usual financial oriented blog, I spent last weekend in Iowa at the Indy Racing League (IRL), Iowa Corn 250 with my 18-year-old son, Sean.  That said, view the video then read the financial implications of our trip to the corn state!

Being from Indy, having been to over 20 Indy 500 races, but never having ventured beyond, this was a real treat.  I TiVo every IRL race each week.  I have come to eat and breathe IRL like I do Butler basketball.  Hey, I am a kid from Indy!

Life Lesson
Spend more time with your kids!

Investing Lesson
For the past four IRL seasons, the league had an arrangement with the ethanol industry, of which all cars, all season, ran on ethanol.  For the 2011 season, this is no longer the case as the cars are now running on that nasty fuel...gasoline!

Rumor has it that Congress is close to reversing the 50 cents per gallon subsidy for ethanol. If it does so, the fuel is not cost competitive. The most reliable studies on ethanol have revealed the following:
  1. Without the 50 cents per gallon subsidy, the fuel is not cost competitive with gasoline.
  2. Regardless of subsidy, the boondoggle of artificially promoting a "greener" fuel has had widespread, negative implications.
  3. The cost of corn has skyrocketed over the past five years, causing Americans of all incomes to suffer an "ethanol grocery tax."
  4. The amount of energy that it takes to produce a gallon of ethanol exceeds the "carbon footprint" of producing a gallon of gasoline.
  5. Game, set, match.
We have the world's greatest natural gas reserves and have not figured out that natural gas is the wave of the future.  Why, you might ask?  Lobbying of course!  Hopefully, Congress, on the latest and third try, will pass an energy bill that places natural gas incentives as the number one way for America to more quickly move towards energy independence. Don't hold your breath!

There you have it!

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