NPR Reports on Ethanol’s stock in the halls of Congress

full story

…At stake are billions of dollars in tax credits for ethanol companies that expire at the end of the year and a pending action at the Environmental Protection Agency that could raise the amount of ethanol in every driver’s fuel tank.

Once a slam dunk, (Growth Energy President Tom) Buis says the industry now has to work harder to convince an increasingly skeptical public and Congress that ethanol continues to deserve government money. A series of television ads launched this week are part of the group’s efforts.

There’s evidence that Congress is weary of giving money to an industry that critics say should be able to stand on its own, after getting its start in the early 1980s with powerful congressional advocates like Sens. Bob Dole of Kansas and Tom Daschle of South Dakota.

“It is our view that after 30 years, we should declare success,” says Scott Faber, a lobbyist for the Grocery Manufacturers Association, which represents food companies that say they have seen their prices rise because of the high use of corn for ethanol.

GMA is part of a growing patchwork of food companies, livestock producers, environmental groups and oil companies who have spent millions of dollars in the last few years framing ethanol’s success as “food vs. fuel.”

“No beaches have been closed due to ethanol spills … no wars have ever been fought over ethanol.”

–         TV ad sponsored by the ethanol industry

 

They argue that the increase in production of corn and its diversion for ethanol is making animal feed more expensive, raising prices at the grocery store and tearing up the land.

The diversion of corn has been particularly tough on the meat industry, which uses corn for animal feed.

Our Take:
Point One–Not that we can speak for a whole industry, but Minnesota farmers whose corn is made into food, fiber AND energy feel that the current ethanol incentives are about getting to a level playing field—we’re sure the ethanol industry would be glad to move forward without incentives to bribe the oil industry to use ethanol in gasoline, when the federal government ends its subsidies to the oil industry—upwards of $35 billion a year. That’s seven times the amount of the tax credit paid to fuel blenders to assure that the ethanol industry can move its product through the stranglehold that petroleum companies have on transportation fuel. Even when ethanol costs less than gasoline, oil companies with retail fuel outlets have a built-in incentive to use the stuff they get out of the ground—even though the world oil price could be $70 a barrel—the company owned Exxon station is using oil that cost $15 a barrel to pull from the ground—thanks in large part to government incentives.

 

Point Two: It’s hard to call it a “diversion of corn” from feed markets when a surplus of corn remains each year (USDA currently projects ending stocks of 1.89 billion bushels) and the feed market—still the largest user of corn—has purchased all it can use. The plain fact is that the meat industry has fallen on hard times because, when there’s a recession, people eat less meat. That combined with an oversupply of livestock created a vice that squeezed all the profits out of livestock farming. Corn farmers want to see their number one customer do well, but it’s hard to sit silently when some in the livestock industry attack crop farmers for creating an energy market that has finally, in the last few years, meant that farmers made more money selling their crop on the open market than it cost to produce it. 

All we can say to the grocery manufacturers is shame on you—for gouging your customers and trying to shaft the farmers that supply the raw materials for your products at the same time.


Point Three: Anti-ethanol environmental groups are shilling for the oil companies, intentionally or not. The choice is swapping a few million U.S. farm acres from other crops into corn—or taking oil from Canada’s tar sands region, where oil companies plan to bull doze 1500 square miles of virgin northern forest in order to strip mine heavy crude and their plans to drill for heavy crude further below, will disrupt an eco-system the size of North Carolina. International environmental groups, as well as the UN’s Intergovernmental Panel on Climate Change, have recognized that this region stores more carbon than the Amazon Rain Forest—so when NPR reports that critics say ethanol is tearing up the land, we say the reports need to dig harder for their facts.

 

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