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Big Oil Investments in Corn Ethanol Net Billions

According to a report from the the U.S. oil industry, they are are the biggest investors in greenhouse gas (GHG)-mitigating technologies this century. That's right, of the $133 billion in GHG technologies, the U.S.-based oil and gas industry invested about $58.4 billion from 2000-2008 according to the American Petroleum Institute (API)'s report.

While the report does not specify how much Big Oil invested in biofuels, it does state that about 10% of the of the $133 billion total investments went to the domestic corn ethanol. If we presume that Big Oil was the only one investing in biofuels, that would mean that they would have invested about $13.3 billion dollars in ethanol, right? Well, had they done that (hint: they didn't) they would have still made money (about $5 billion, in fact) since taxpayers gave Big Oil over $18 billion dollars in subsidies to mix corn ethanol into gasoline.

Ironically, the report, which criticizes corn ethanol for its low greenhouse gas performance, says that sugarcane ethanol, with its 90% GHG reduction, was not included in the study "as it is not a major source in the North American market." Duh, of course, it isn't a major source yet. How can sugarcane compete subsidies like these for corn ethanol and with protectionism in the form of a 54 cent per gallon tariff plus a 2.5% ad volorem duty on imported ethanol? It's amazing that the Brazilians managed to sell about 1.5 billion gallons of sugarcane ethanol to the U.S. during the last eight years.

The report, prepared by the University of Texas at Austin's Center for Energy Economics analyzed more than 420 companies' annual reports, federal budgets and other publicly available documents. The $132.9 billion investment total accounts for money invested in wind turbines, biofuel refineries, photovoltaic panels, CO2 capture and storage (CCS) infrastructure and other low- or no-carbon technologies. The report estimates that the federal government invested $19.2 billion over the eight-year period, while other sectors, including electric utilities and biofuels startups, accounted for the remaining $55.3 billion invested.

Kyle Isakower, API's director of policy analysis, called the oil and gas companies' $58.4 billion investment a "pretty impressive" number when put in context. I'd say.... The world's five largest oil companies recorded a combined profit of about $100 billion in 2008. The companies invested only about 4 percent of that total in alternative-energy ventures, according to analysis by the Center for American Progress.