Wow. This is amazing.
So, remember what I said about prices, giving accurate signals about scarcity?
That's all out the window if you impose subsidies. Then, you aren't making something because it's scarce. You are making it because it's SUBSIDIZED! And it turns out you can make a lot of money by shipping cargo back and forth across the border with Canada, without ever unloading it. Because we subsidize the transport, with credits.
Excerpt (emphases added): A cargo train filled with biofuels crossed the border between the US and Canada 24 times between the 15th of June and the 28th of June 2010; not once did it unload its cargo, yet it still earned millions of dollars. CBC News of Canada was the first to pick up on this story on the 3rd of December 2012, and began their own investigation into the possible explanations behind this odd behaviour.
...[Investigators] managed to obtain an internal email which stated that the cars of the train were all reconfigured between each trip but that the cargo was never actually unloaded, because “each move per car across the border is revenue generated”, the sale of the cargo itself was inconsequential.
The cargo of the train was owned by Bioversal Trading Inc., or its US partner Verdero, depending on what stage of the trip it was at. The companies “made several million dollars importing and exporting the fuel to exploit a loophole in a U.S. green energy program.” Each time the loaded train crossed the border the cargo earned its owner a certain amount of Renewable Identification Numbers (RINs), which were awarded by the US EPA to “promote and track production and importation of renewable fuels such as ethanol and biodiesel.” The RINs were supposed to be retired each time the shipment passed the border, but due to a glitch not all of them were. This enabled Bioversal to accumulate over 12 million RINs from the 24 trips, worth between 50 cents and $1 each, which they can then sell on to oil companies that [haven't satisfied EPA renewable fuel quotas].
A nod to Jeremy B.
So, remember what I said about prices, giving accurate signals about scarcity?
That's all out the window if you impose subsidies. Then, you aren't making something because it's scarce. You are making it because it's SUBSIDIZED! And it turns out you can make a lot of money by shipping cargo back and forth across the border with Canada, without ever unloading it. Because we subsidize the transport, with credits.
Excerpt (emphases added): A cargo train filled with biofuels crossed the border between the US and Canada 24 times between the 15th of June and the 28th of June 2010; not once did it unload its cargo, yet it still earned millions of dollars. CBC News of Canada was the first to pick up on this story on the 3rd of December 2012, and began their own investigation into the possible explanations behind this odd behaviour.
...[Investigators] managed to obtain an internal email which stated that the cars of the train were all reconfigured between each trip but that the cargo was never actually unloaded, because “each move per car across the border is revenue generated”, the sale of the cargo itself was inconsequential.
The cargo of the train was owned by Bioversal Trading Inc., or its US partner Verdero, depending on what stage of the trip it was at. The companies “made several million dollars importing and exporting the fuel to exploit a loophole in a U.S. green energy program.” Each time the loaded train crossed the border the cargo earned its owner a certain amount of Renewable Identification Numbers (RINs), which were awarded by the US EPA to “promote and track production and importation of renewable fuels such as ethanol and biodiesel.” The RINs were supposed to be retired each time the shipment passed the border, but due to a glitch not all of them were. This enabled Bioversal to accumulate over 12 million RINs from the 24 trips, worth between 50 cents and $1 each, which they can then sell on to oil companies that [haven't satisfied EPA renewable fuel quotas].
A nod to Jeremy B.
3 comments:
Sweet Jesus I loathe our alternative energy rent machine.
Palm hits forehead.
How can people believe markets are not efficient? Seems to me that the EPA created a large pile of money for someone to pick up. Verdaro found it, and figured out what to do to get it. Good for them. Just like great advertising can kill a poor product, efficient markets illuminate and exploit poor central planning. (Is "poor central planning" redundant?)
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