Jun 25
Ethanol’s tangled presidential web
By Denise Ross
Ethanol seems poised to become an increasing, perhaps dominant, part of the energy / high gas prices debate as Obama and McCain roll towards November. And South Dakota’s own Tom Daschle and John Thune also would seem stuck in the middle of this one, as are South Dakota’s ethanol companies - now giants in the industry.
In a New York Times story tsk-tsking Obama for special interest pressure despite the Democrat’s insistance that he is immune to this American political staple, Daschle attempts to distance himself as an influence on Obama when it comes to energy policy.
… when Mr. Obama travels in farm country, he is sometimes accompanied by his friend Tom Daschle, the former Senate majority leader from South Dakota. Mr. Daschle now serves on the boards of three ethanol companies and works at a Washington law firm where, according to his online job description, “he spends a substantial amount of time providing strategic and policy advice to clients in renewable energy.”
Mr. Daschle, a national co-chairman of the Obama campaign, said … his role advising the Obama campaign on energy matters was limited. … Mr. Daschle said, “He has a terrific policy staff and relies primarily on those key people to advise him on key issues …
Any of those folks happen to come from Daschle’s ranks? More to the point, why would gas-a-hol / ethanol-loving Daschle try to downplay his influence on this? Ethanol must be viewed as a potential problem for Obama. It sure helped in Iowa, but maybe it could hurt nationwide. (And regular readers know my frustrations with this broader debate. So far it’s oil companies / Coke & Pepsi 10, Poet & VeraSun, 0. Gaaaa!)
Even the Daily Green, an online enviro site, calls ethanol “the renewable fuel we love to hate.”
Still, Obama’s official policy is to support continued development of ethanol, corn-based and otherwise, as a path to energy independence. And he would keep the tariff on foreign ethanol. McCain’s policy is, essentially, the opposite. No ethanol subsidies, no tariff.
Which would seem to put Sen. John Thune, D-S.D., in an awkward position, as he fought exhaustively to keep both in the most recent farm and energy bills. Should he become the VP choice, what’s a Murdo boy to do? Disagree publicly with his boss or abandon his long and strongly held positions - and record - on the issue?
Even if Thune doesn’t get the VP nod, he’s got a sticky wicket in this one.
As if the presidential politics of one of our greatest economic successes weren’t enough to wrap our Midwestern prairie heads around, VeraSun of Brookings decides not to operate a few plants it has built. Why? High corn prices. I swear it’s true.
And the national financial papers are all paying attention. Says the Wall Street Journal:
The postponements reflect the immense pressure ethanol producers are under as their margins are squeezed by high corn and natural-gas prices.
… analysts at Credit Suisse called the move unprecedented and said they expect more plant closings as the industry struggles with lower profits into next year.
That’s enough for now. I’m getting a high fructose corn syrup headache.
2 Comments so far
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Unless South Dakotans read papers like the Wall Street Journal, the New York Times and watch a lot of cable news, they have no idea just how much dislike, distrust and suspicion there is out there about CORN-BASED ethanol.
It is generally accepted that the ethanol boom has driven up corn prices, which in turn has driven up food prices and in fact has caused some shortages.
The domestic ethanol industry itself is now being victimized by its own succes. Higher corn prices prompted VeraSun to put plans for some new facilities on hold-indefinitely.
Apart from driving up corn prices, the domestic ethanol market is criticised because it is more expensive to manufacture than switchgrass ethanol, doesn’t travel well and is not at all effective in fuel efficiency.
Combine that with protectionist tariffs that effectively bar Brazilian ethanol from the market and the continuing welfare status of the domestic ethanol industry (Have you seen how much in subsidies flow into ethanol companies coffers) and you have an industry that appears to have done little other than create a lot of South Dakota millionaires (The Poet plane fleet, I believe, is now at 7.
Personally, I have done the math on my own car and found that, even with the higher price of non-subsidized regular gas, I’m getting better mileage and hence, using less gasoline and spending less money, than if I used E-10.
Where ethanol DOES come in handy is to postpone any substantive discussion and creation of alternative energy sources, and continue our reliance on oil…Big Oil.
All that said, Obama’s endorsement and backing of ethanol will help him in some farm states. You can argue the morality of that, but then you can also argue the morality (and fundamental wisdom)of John McCain’s desire to continue the failed Middle Eastern policies of the current Administration-especially now that the Iraq War has finally been revealed a war to award control of that country’s oil fields to American Big oil companies.
And the wheel keeps turning.
I wish people like you would get your facts straight.
The reason Vera Sun currenty has plant on hold and others are shutting down is because at the end of the day, specutlators are driving commodiites such as oil and corn beyond reason.
Right, didn’t I say it is high corn prices keeping the plants off-line? -Denise