Cramer: “Ethanol is a fuel that doesn’t work”

Cramer — who spews out on so many things he can’t help but be wrong on many of them — al least gets the problems with Ethanol right:

"The bemused best-selling author noted the "utter inconsistency" of laissez faire.

"We want laissez faire when it comes to business — except when it comes to the insistence of a politically popular but economically and environmentally hazardous renewable fuel, ethanol," he said.

As a result, he said we have unequivocal government support for a fuel that doesn’t work and that raises the price of food for everyone including those who can least afford it, which, in turn, forces the Federal Reserve to keep the money supply tight to rein in resulting inflation.

"So we are laissez faire when it suits us … and we are anti-laissez faire when we can help farm states crucify us on a cross of ethanol," he said.

He railed against a tax structure that supports "tax rates for billionaires at a lower percentage level than those who make $30,000 a year. This is utterly shameless."

Populism lives . . .



Jim Cramer challenges ‘laissez faire’ government
Jan. 30, 2008




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  1. David commented on Feb 2

    Okay, I’m still waiting for the first person to point out how funny this is coming from Cramer, a guy who says he promotes free market capitalism and then turns around and cries out on national TV for the Fed to bail out Wall St. with “liquidity”, aka money drops.

  2. David commented on Feb 2

    Oh wait. In reading this article, I now see that the Cramer on CNBC is admittedly a “Mad Money” persona, and not the real Jim Cramer.

    He also feels talks about the government’s true role in promoting the general welfare, and that we need government regulation to protect us from “predator capitalists”.

    It’s funny, because I thought government regulations and subsidies helped cement advantages for entrentched businesses and “predator capitalists” like the large Agribusiness companies who profit from the ethanol regs he specifically cited as damaging to our nation.

  3. Paul Jones commented on Feb 2

    Nothing can force the current Fed to tighten the money supply.

    They will institute a negative interest rate to prop up the neo-cons.

  4. Ross commented on Feb 2

    If Cramer get it, it MUST be obvious!

    Unless there are weather problems, we should have a good grain crop. Around here, land that was pasture or hay meadow was disced last fall and purdy green winter wheat is a growin. Beans is the crop for 08.

    Ethanol economics work best with sugar. Best being a relative term.

  5. Joe commented on Feb 2

    Since Barry had a Ludwig von Mises quote up earlier in the week, another quote might be in order. From the back cover of December’s issue of the Freeman, originally from “Some Observations on Current Economic Methods and Policies”

    “A governmental system that spends every year billions of dollars of the taxpayers’ money to make essential foodstuffs, cotton and many other articles more expensive should certainly have the decency not to boast of an alleged war against poverty.”–Ludwig von Mises

  6. college kid Ted commented on Feb 2

    Isn’t it funny how consistently the political initiatives designed to make things better for us all end up backfiring in the end, Social security being the most obvious example.

    Ethanol is such a small percentage of our fuel supply and requires such a huge part of our agricultural product to produce current quantities. I would like to see some sore of data about the cost reduction for petroleum products as a result of ethanol in relation to the cost increases of other products as a result of the increased ethanol production.

    Sure, ethanol may be renewable but is it really worth sacrificing an affordable food supply to marginally reduce the cost of gas?

    As a college kid the most concerning product that will see a price increase to me: Beer, hops have become a less preferable crop to plant for farmers than soybeans for ethanol production.

    I like what Cramer has to say on this topic, although I think this is more genuine a perspective than we tend to see on Mad Money.

  7. Bob A commented on Feb 2

    Mr. Diarhea of the mouth 24/7… Your life will better if you just filter him out completely and forever.

  8. Winston Munn commented on Feb 2

    “Ethanol is a fuel that doesn’t work.”

    The same can be said for the administration backing its production.

  9. rickrude commented on Feb 2

    Cramer sometimes makes sense with his calls.
    Where as Kudlow makes no sense at all times.
    Those of you bashing Cramer, and keeping quiet about Kudlow should be ashamed of yourselves.

  10. Doug Watts commented on Feb 2

    Ethanol reminds me of the University of Maine getting endless guvmint millions of $$$ to try and grow Atlantic cod and halibut in a hatchery and aquaculture operation (and failing miserably) instead of addressing the well known and specific issues that have debilitated the most perfect Atlantic cod and halibut hatchery in the world: the Gulf of Maine.

    Ethanol is the same dynamic. You have a problem. Then you have a whole host of people who get to look good (Congress, state legislators, University administrators etc. ) even though it is obvious from the outset that the solution will not solve the problem. And in both cases, the only way to solve the problem (energy, overfishing) requires political leadership and tough decisions, not a ribbon cutting ceremony and a host of negative, unintended consequences.

  11. wunsacon commented on Feb 2

    >> end up backfiring in the end, Social security being the most obvious example.

    That’s not an obvious example. I’m glad society decided to help the old and the disabled eat and possibly afford shelter. That’s a success.

    Are you worried about the national debt? First, future “projected” Medicare expenses dwarf social security. That’s the big kahuna. Second, fixing the social security shortfall is easy. (But, there’s no consensus on how. So, it doesn’t get done.) Either raise the retirement age and/or eliminate the cap on collecting soc sec taxes. (Equivalent to increasing tax on the top decile earners by 15%.)

    I’m not an expert in this area. But, long-time poster VJ knows something or two about this subject.

  12. jaden commented on Feb 2

    With such obvious wrong doing, manipulation, and bullshit being conducted by these people in power….
    It angers me by the day…
    It has made me question what I am really doing w/ my life…
    Should I continue to make a good six-figure income from my Masters in ECE… Should I wake up every morning @ 5 a.m PST to try to trade my income out of the pits of inflation and bullshit taxes?

    Should I just say fuck it and take a stand…
    Risk my financial future and my well being to pursue a purpose greater than myself…

    To end the bullshit… To try to make a dent in the this system which is seemingly just out to royally fuck everyone over who wants to do something of substance with their life and and reward those who aren’t… Like honestly, who the ____ are these people who are running are state, local, and federal governments? Are they those kids who slept, goof’d off and created havoc in the classrooms while everyone was trying to learn life skills? But they ‘speak’ so well.. And o’ they are soo confident… And o’ dont they seem like visionaries? Really ? I mean, wtf is going on?

    No one would stand for me coming into work everyday not earning my pay and further fucking things up…. So, why is the system (Governance) such that these assholes can do this?

    This has been the 30th headline I have read since maybe OCtober 07′ that has made me absolutely want to throw up after investigating it further…

    Just what the hell is going on?

  13. ThatGuy commented on Feb 3

    Sounds like class warfare too me. How shrill! Somebody think of ADM’s shareholders!

  14. Marcus Aurelius commented on Feb 3

    The Bush Administration is not constrained by reason, logic, science, mathematics, morals, ethics, precedent, history, law, public sentiment, national interest, duty, humility, guilt, or shame. It is from this blissful ignorance that ethanol is distilled.

  15. Dave commented on Feb 3

    I forget, are the Dems against ethanol subsidies or did they vote for them?

  16. kk commented on Feb 3


    WASHINGTON, D.C. –U.S. Senators Barack Obama (D-IL) and Tom Harkin (D-IA) yesterday introduced a bill to immediately update the Renewable Fuels Standard (RFS) to require the production of 18 billion gallons of renewable fuels by 2016 including 3 billion gallons of advanced biofuels, such as cellulosic ethanol. The legislation will implement the RFS requirements that were included in the energy bill passed by the Senate in June. However, negotiations between Senate and House on competing energy bills have stalled, and the new RFS has yet to take effect. Obama and Harkin’s bill recognizes the need for prompt action to update these renewable fuel requirements to provide market certainty to small, local, and farmer-owned ethanol producers.

  17. Doug Watts commented on Feb 3

    On the other hand, the cost of ethanol needs to compared with the question of whether the U.S. would have ever spent $500 Billion occupying Iraq if it was called Chad or Tierra del Fuego instead of Iraq … At least under the present administration, the externalities of not having an alternative fuels program and supply have become expensive …

  18. F. Frederson commented on Feb 3

    Wow, Cramer is so right on this one I’ll have to stop thinking ill of him for a bit… and I’m done, but I hope he keeps pointing out how stupid the ethanol subsidy is.

  19. ilsm commented on Feb 3

    “Social security being the most obvious example”

    Social security is not bankrupt nor in any kind of solvency trouble.

    The whole country is the issue.

    SS has been pillaged to keep the cash deficit artificially low.

  20. ilsm commented on Feb 3

    I am not aware of why ethanol does not work as a source of energy.

    I am fsmiliar with technical advances in using cellulose to make bio fuels which will relieve the need to use plant sugar bases for ethanol production.

    Does anyone think farmers will grow saw grass instead of wheat?

  21. Greg0658 commented on Feb 3

    since I’m in the middle of corn country – I’m content we have a viable alternate fuel for the combustion engine

    I hope world politics doesn’t interupt the oil supply – I can think of a half dozen scenarios (I won’t mention)

    I ask:
    does this concept make sense in an
    un-cash base society?

    I know ya are, but what am I … eee

  22. Damian commented on Feb 3

    The Republican continue to preach free markets as long as the “market” is working for them. They also continue to say that Keynesian economic policies, when applied to social programs are bad, but have no trouble applying the Keynesian methods for the military (did anyone notice their new budget is $750b?) and Wall Street (rate cuts galore).

    As for Cramer, a broken clock is right twice a day.

  23. ken h commented on Feb 3

    Ethanol is a joke. Not to mention it takes away valuable land for our food. There are plenty of studies that show population growth exceeding the amount of land to plant crops.

    The funniest thing to me is we have one station here that carries E85 and it sells at about 15 to 20 cents less than gas. Ethanol is 20-25% less efficient than gas folks which means it gets less MPG. It eats your car up too. Total joke, like Gore’s carbon credits (hook in mouth). Ethanol ends up burning more gas. Plus, it takes fossil fuel to create ethanol.

    You want to make a difference? Walk more, take local vacations, carpool, ride a bike. Live in a smaller house, etc, etc, etc. we are so wasteful in this country.

    Just use less gas.

    Enron like tactics work in the short run but America will find another way like they always do. So as profits rise from overly priced energy with ridiculous reasons such as Cows farting on a pipe line, people decrease consumption an find another way. Ethanol ain’t cheaper and it’s not even close to being viable for our country.

    Oil will come down as profits wane and people find another way. Energy cartels may find that Americans enjoy saving energy and that it isn’t that hard. Uh Oh, better try to massage that sweet spot better.

    It’s never enough, they had America driving SUV’s and living hours from work in McMansion that they had to heat and cool. Not enough, Greed, Greed, Greed.

  24. VJ commented on Feb 3

    Cramerica is wrong.

    First, the claim that ethanol caused price inflation in food was debunked. It’s a Big Oil propaganda talking point. Second, he ignores the fact that American farmers currently utilize 80 million acres of farmland to export large amounts of corn and soybeans, which could be used to make ethanol. Third, he ignores the fact that we currently pay a lot of money to farmers to NOT grow crops on 40 million acres of farmland, which could be used to grow corn and soybeans. We could make 180 billion gallons of ethanol from that 120 million acres of farmland.

    However, corn and soybeans are merely transitional feedstocks anyway, as Khosla is building a cellulosic ethanol pilot plant next year which can convert agricultural waste and landfill trash into ethanol.

  25. VJ commented on Feb 3

    As to Social Security:

    college kid,

    Isn’t it funny how consistently the political initiatives designed to make things better for us all end up backfiring in the end, Social security being the most obvious example.

    Social Security is more financially sound today than it has been throughout most of its 72-year history.



    SS has been pillaged to keep the cash deficit artificially low.

    Only as an accounting gimmick to make the massive and exploding federal deficits appear smaller.

    The $2,239,437,635,000 in U.S. Treasury Securities held by the Social Security Trust Fund are safe and sound and have been returning a 5%-6% ROI, which is far better than the stock market since 2000.

  26. That Guy Drinks Beer commented on Feb 3

    I don’t agree with the anti-ethanol crowd. Their entire argument stems from a single source, David Pimental. Even he contends that gasoline is a net energy loser too:

    “In other words, it takes 10 percent more energy to make gasoline than it produces. Pimentel’s gasoline equation puts him at odds with some of his supporters. Oil industry officials have quoted Pimentel’s findings on ethanol to support their case against the fuel.”

    If you’d like links to source data rather than the opinions of opinionated individuals, start here:

    There’s just too much disinformation on this topic.

  27. M1EK commented on Feb 3

    TGDB, your own wikipedia reference points out that the energy balance on gasoline is 15-1; while corn ethanol is 1.3-1. Cellulosic ethanol is a hail mary at this point – way too many unknowns (will switchgrass continue to grow by itself at such high yields if we don’t allow it to fertilize the soil, for instance?)

  28. Time to refine the BS commented on Feb 3

    As others correctly point out, food inflation is a talking point of the oil industry and as much or more the result of their own doing.

    Further, the whole concept of city living and walking everywhere is a red herring for the purposes of a constructive conversation about fueling the future. Responsibility in the real world means I have to go places and do things, even when it’s -40. Anybody who dropped their responsibilities rather than bike 5 miles in the cold or stand at a bus stop for 15 minutes in the driving wind deserves no voice in the short term part of this discussion.

    The truth that everyone’s afraid to speak is that this is more about the movement of money than it is about what chemical compound provides propulsion. Cramer has been cheer leading TM above all credibility and they are now moving to bring Flex Fuel vehicles to market years behind the domestics. Accepting Ethanol is an acceptance that F and GM were technically correct all along. Take a look at the auto trade rags, according to F, the future will be turbo charged. Without getting too technical, 105 octane E85 + lots of boost is a better technical solution than a fixed ~9.5:1 CR used by today’s Flex Fuel vehicles because the computer can adjust boost for what’s in the tank. The combination of less required displacement to provide the same available power specification, and the fact that boost can be varied by demand can eliminate the entire talking point of “not driving as far per gallon”. Of course E85 does not go as far today, it’s being used in an engine that has to be capable of stepping down to run on gasoline as well as the winter mix (E70), which is not as good as E85. If the engine was designed and calibrated for full time E85 at closer to 13.5:1 CR, much of the efficiency gap would be closed up. The real world takes time to bring these things to market and so don’t get hung up on the efficiency argument, it won’t be there in a few years.

    The second part is that very few financial instruments carry the profit potential of oil. As long as someone can sit down at their computer and day trade the QM with a few grand, why would they not want to kill off competition to their livelihood? If we are serious about not being responsible for using the remaining oil for propulsion rather than it’s other uses, than Ethanol contracts should be available with the same (or better) margin requirements and contract sizes. Let’s face it, what refinery buys oil 500 barrels at a time?

  29. That Guy Drinks Beer commented on Feb 3

    “Cellulosic ethanol is a hail mary at this point – way too many unknowns (will switchgrass continue to grow by itself at such high yields if we don’t allow it to fertilize the soil, for instance?)”

    Really, then how did Brazil do it?

  30. M1EK commented on Feb 4

    TGDB, they’re doing it because they had a waste stream (from sugar cane operations) handy (not all their ethanol comes from stuff that would otherwise be wasted, but a lot of it does). They also have a radically different climate and soil situation with sugarcane than we do with switchgrass.

    There’s a lot of “we think it could work” but nobody’s tried for long enough to see whether the switchgrass continues to grow “by itself” without additional fertilizer if you don’t leave it there.

  31. ef commented on Feb 4

    Don’t blame the farmers. Blame the oil/auto industry ;-)

    “greatest oil and consumer savings can be realized through improving the fuel economy of new vehicles”

    The cornfield-to-gas-tank costs of producing corn ethanol are high, and one of the biggest concerns is that it uses a tremendous amount of water for production. And, if you’ve been keeping up on that topic, you know that’s a huge issue. Aquifers are under stress all over the place. As for the U.S. as a whole, it’s probably more of a negative. I’m all for alternative energy, but we are wasting valuable time and resources.
    [Union of Concerned Scientists,
    Producing Ethanol Could Strain Resources]

    ABC Nightline last week had an interesting story about farmers in N. Dakota. Evidently that rich soil for crops, also is a great location for oil. It looked like images of the CA gold rush. People in the city hall looking up records of who owned the land, and who owned the mineral rights. Some locals were concerned there would be a big buildup of houses and then everything would dry up.

  32. Sean commented on Feb 6

    Lol, You are already running your car on 10% ethanol and have been for years.

    The annual capacity of the U.S. ethanol sector stands around 4.6 billion gallons and most of it is used already by the refineries as a gasoline additive.

    New plants under construction or expansion are likely to add another 2.1 billion gallons to this number, but that will be it for ethanol.

    The Government namely the Department of Agriculture has told all the midwest farmers who they were paying not to grow anything for years, to now grow corn!

    Older article on producion can be found here.

  33. diogenes commented on Feb 7

    And not one commentor mentioned the logistics of ethanol. It can NOT be pumped through the existing gasoline pipeline network. It has to be trucked/trained since ethanol absorbed water and tends to corrode pipelines.

    “Wider use of pipelines to transport ethanol is problematic for several reasons. It means addressing ethanol’s water affinity problem (ethanol is water soluble meaning it absorbs water). Because water accumulation in pipelines is a normal occurrence (in most cases water enters the system through terminal and refinery tank roofs or can be dissolved in fuels during refinery processes), introducing ethanol into a pipeline risks rendering it unusable as a transportation fuel.

    The second challenge to transporting ethanol by pipeline is the need to address corrosion issues. Ethanol-related corrosion problems can result from how ethanol behaves in the pipe. There is some evidence that ethanol in high concentrations can lead to various forms of corrosion including internal stress corrosion cracking, which is very hard to detect. This damage may be accelerated at weld joints or “hard spots” where the steel metallurgy has been altered.”

    You want to think alternative fuel, think bio-diesel, whether recycled vegetable oil.. or bio-diesel created from Algal ponds. Both can be co-mingled with pretroleum derived diesel and transported via existing pipelines:

    And most importantly, they don’t create inflation in food commodities that negatively impact the common household.

    Of course.. that means the corn/soybean farmers might not vote for a particular political party.. But so be it..

    Ethanol is for drinking, not driving..

  34. Garko Novis commented on May 9

    buying gas has become a major investment decision, as in “do i invest in some food so i can get thru the day or some gas so i can get where i have to go?” It should never be this way but it is. But that doesn’t mean we have to just suffer. There is a real solution in Water4Gas and you owe it to yourself to check it out!

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