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Wisconsin Was Warned About State Senator Luther Olsen And His Brothers David Olson And Paul Olsen Regarding Ethanol Production

May 31, 2011

Over the years, thanks to a friend inside the Wisconsin Department of Natural Resources, I have had more than enough information about David and Paul Olsen.  Not only did their ethanol production dream become a bust, but worse still the Olsen brothers had run afoul of state regulations.  The Olsen brothers worked over-time to deny any wrong-doing but ended up paying large fines to the state for the conduct they had engaged in.

So the news this weekend concerning David and Paul Olsen was no earth-shaking moment, but instead something that everyone knew was coming at some point.

The Oshkosh Northwestern reports that brothers David and Paul Olsen owe cash to the state, attorneys, banks and relatives. (The Wisconsin State Journal reports the Olsen brothers even owe money to their mom!) They pioneered ethanol production in Wisconsin, but ran into financial woes when the price of ethanol went down and corn prices rose. 

Their ethanol plant filed for bankruptcy in 2009 – just two years after it opened in Jefferson. Now, the brothers are filing for personal bankruptcy, the Northwestern reports.

The fact is that this ethanol boondoggle operation and the forces that tried to make it work were all on public display for years.  Even tough-minded conservatives  back in early 2009 were calling this for what it was.

The Olsens are rather notorious in central Wisconsin. Their company pleaded
guilty to a federal felony for falsifying data in a pollution probe. At least
six of their firms have received sanctions or are accused of stiffing creditors.
One of the companies has been hit with two separate $75,000 DNR pollution fines.
Their pet political hack is the disappointing Bob Welch, the former Republican
legislator who decided to become a political insider after losing a U.S. Senate
bid. Welch, who represented the district now held by Luther Olsen, ran the state
ethanol association and pushed for all the subsidies and mandates. There was a
time Bob Welch was a sincere guy, but there’s something about ethanol that
brings out the worst in every politician.

Bob Welch’s involvement in the Olsen brother deal making group never surprised me.   I was never surprised that Bob Welch was not able to make the ethanol pig fly.  It does however underscore what I have always known about Welch, and alerted the readers of the Waushara Argus, my hometown newspaper, about for years when Welch served in the State Legislature.  Bob Welch was always more partisan-minded than intellectually capable.

State Senator Luther Olsen came under attack for his involvement in the ethanol mess too, and it seems this weekend’s headlines will not carry favor with voters in his upcoming recall election.

Here’s the background. When Gov. Jim Doyle and the state Legislature were
whoring out to the ethanol interests, they not only pushed for state mandates
for ethanol use but gave tax breaks to developers who wanted to build ethanol
plants. The prime spots at the feeding trough were held by central Wisconsin’s
ethanol hustler, Paul Olsen, and his brother, Republican state Sen. Luther Olsen
of Ripon. The subsidies resulted in massive overbuilding of ethanol plants – a
major problem since the only demand for ethanol comes from the mandates. No sane
motorists want the watered-down corn mash in their car.

And who pushed the hardest for these mandates? None other than Paul Olsen’s
brother Luther. Talk about conflicts of interest. The biggest legislative backer
for mandating the use of ethanol was a guy whose family owns a major ethanol
plant!

What might be the harshest news of all is that the Olsen brothers owe their mother money.  So at the end of a long hard day of legal woes and financial shortcomings there may not even be a hot cup of coffee and slice of pie at the old homestead for these brothers.

But there is always a pipe dream to recall with fondness, and the days when flouting state regulations brought smiles and laughs and visions of grain bins full of cash.

3 Comments leave one →
  1. L188188 permalink
    July 29, 2011 1:10 PM

    @Gritrock – I think you forgot to add in the cost of replacing your trashed engine after 100K miles. Enthanol was and is a boondoggle, and Olsen is up to his armpits in it.

  2. June 20, 2011 11:34 AM

    Gritrock,

    I have had a source for news over the years inside the DNR and so knew plently about this case at the time it was happening. The post is quite mild I think in relation to all there is to know.

  3. gritrock permalink
    June 19, 2011 10:49 PM

    I’m not sure if you have a good understanding of the grain and ethanol business, or an axe to grind with the Olsen’s?
    I ran a 1996 Dodge Ram pick-up on an E-50 blend for about 3 years. While I lost about 2 miles per gallon, or 13% of my mileage, I was paying about 30% less for half of the fuel going into my tank, or 15% of the entire tank. So still a net savings to me. My truck ran fine during that time, and is still going strong with over 240,000 miles.
    Ethanol contains about 34% less BTU’s than straight gasoline, but most studies show that the average Flex Fuel vehicle only shows about a 25% drop in mileage and the price of E-85 is usually about 30% cheaper than stragiht gas. It could be cheaper than that, but the fuel companies keep it in that range on purpose.
    The United States now produces 10% of it’s motor fuel with home grown corn. Early 20th century vehicles ran mostly on alcohol, until prohibition put an end to alcohol production in the United States.
    Brazil currently uses a minimun of 25% alcohol in all of its fuels, and up to a maximum of 95%. All of it’s cars and trucks are capable of burning any blend in between.
    Both Brazil and the United States are capable of producing ethanol at a price that makes it cheaper to burn than petroleum based gasoline, even with a slight drag in mlieage.
    The United State literally has food to burn. We are about 5% of the world population, but produce about 42% of the food. We have always had some sort of farm program in this country. These programs are usually in the form of acreage set-aside, CRP, wetlands, etc… As recently as the 1980′s we were paying farmer to idle 1/2 of their land so as to avoid over producing food. I would much sooner grow all we can, and then burn the excess.
    We used to grow about 8 billion bushels of corn. We now grow about 13 billion bushels of corn. We burn 5 billion bushels of corn for ethanol. A bushel of corn is 56 pounds and about 9% protein. So there is about 5.1 pounds of protein in a bushel of corn. When you use that bushel of corn for ethanol you not only get 2.85 gallons of ethanol from that bushel of corn, but you get 17 to 20 pounds of Distillers Grains that have about 30% protein. This means that the 17 pounds of DDG’s still contain the entire 5.1 pounds of protein that was in the whole bushel of corn.
    You mention Wisconsin lawmakers giving ethanol plants tax breaks, but tax breaks for any new .business to build a plant is nothing new, nor uncommon in any state. If GMC or Maytag, etc… were to shop around for a place to build a new production plant, don’t you suppose every state, county, or city would being offering tax rebates to draw them it?
    If we get rid of the ethanol business, it’s not like their is going to be an extra 5 billion bushels of corn left over, there will merely be a bunch of plants closed, people out of business, and taxpayers paying farmers to not grow food on their acres again.

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