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Having a Gas with Corn Ethanol

Tuesday, June 21, 2011

With Congress’s appetite for ethanol souring, the corn ethanol lobby is digging deep for reasons to continue lavish government support for the environmentally damaging fuel. The Renewable Fuels Association – in a gambit to co-opt the annual gas price debate – is adorning Washington DC city buses with ads claiming that corn ethanol reduces gas prices by $0.89 per gallon. Don’t tell the RFA, but in Kansas, corn and soybean farmer Mike Wintermantel is off-message. As the Associated Press reported, he says high gas prices suit commodity crop farmers just fine:

High gas prices are a windfall for commodity farmers who grow the corn needed to make ethanol, while smaller food producers are struggling to keep up with fuel costs. One of those hoping fuel costs stay high is Baldwin City farmer Mike Wintermantel, who grows 1,000 acres of corn and 1,000 acres of soybeans on a farm near Baldwin City in northeast Kansas. He has spent about $50,000 on fuel this year and said he doesn't mind at all. "We hope [fuel] prices stay high," Wintermantel said. "It's kind of odd, but that's the truth."

A wha? The RFA lobbyists’ claim of lowering gas prices, which was echoed by the National Corn Growers Association, is based (surprised?) on an RFA-funded study. And they conveniently ignored a November 2008 report by the authoritative National Renewable Energy Laboratory (NREL) that destroyed the notion that ethanol cuts gas prices. It concluded: by finding,

All of the studies that we reviewed focused on the savings from ethanol per gallon of gasoline. However, this does not represent the true savings to the driver, as it does not take into account the negative impact on mileage performance resulting from ethanol’s lower energy content when compared to unblended gasoline. As this study will show, when these two factors are taken into account, the net impact of the substitution effect can actually be an increase of the mileage-adjusted cost of gasoline for drivers.

Adding insult to injury, the lab’s report went on to say:

The benefits of reduced gasoline production costs are not necessarily fully passed through to the end consumer in all regions. The producers enjoying the lower production cost due to blending ethanol will keep the benefit to themselves and not pass it on to the end consumer.

And high gas prices aren’t the only thing giving the frank-talking Mr. Wintermantel a boost. Since corn ethanol production is mandated by law, subsidized with tax credits and protected from imported ethanol, Mr. Wintermantel gets a lot of help. Since 1995, he has also pocketed $510,807 in taxpayer-financed federal farm subsidies. Yet during the debate last week on ethanol’s tax credit and protective tariff, no one mentioned the $800 million annually in traditional taxpayer-funded subsidies that go to agribusinesses producing corn for ethanol. The corn industry wins when gas prices are high and corn prices are high. And sadly, as the AP article illustrates, high gas prices do hit hard at farmers who do not happen to raise commodity crops, such as growers of fruits and vegetables and others who do not enjoy layer upon layer of government support. Meanwhile, people spending a big chunk of their paychecks on fuel while Agribiz cashes in on record profits could be feeling mocked by the corn and ethanol lobbies right about now. In the heat of the summer, while Americans struggle with the double whammy of a sluggish economic recovery and high gas prices, what does the corn and ethanol lobby – flush with cash from high gas and commodity prices – consider its flagship endeavor? NASCAR. We all know that nothing says “clean” and “green” like entertainment based on burning huge amounts of motor fuel. Right? Doesn’t a sport whose average fan drives 250 miles to the event just scream “conserve?” Well, as I’ve written before, the only thing green about NASCAR and ethanol is the cash. NASCAR driver, corn ethanol spokesman and wannabe climatologist Clint Bowyer had this to say about motor racing’s green bona fides.

The ethanol is cutting emissions more than 50 percent already in these cars.

There is no way that using 15 percent ethanol cuts emissions by 50 percent. Even unicorn blood couldn’t do that. This is the distortion du jour for Big Ag’s mouthpieces, and then they wonder why consumers don’t trust them anymore. Instead of spending millions on PR campaigns, they might just begin by telling the truth about their product. Instead, the chairman of the National Corn Growers Association tied himself in knots as he told the Scranton (Penn.) Times-Tribune how corn ethanol lends a green hue to NASCAR:

Ethanol is a renewable fuel, which means someone like Darren Ihnen, a South Dakota farmer who also is chairman of the National Corn Growers Association, can use the same piece of land every year to grow corn that can be used to produce ethanol.

Monoculture much? Growing the same chemical-, water- and soil-intensive crop on the same acreage year after year earns the “renewable” brand? Maybe Mr. Ihnen was thinking of the year-after-year subsidy payments he receives from taxpayers to grow corn. They’ve totaled $572,000 since 1995. Now that’s renewable. Despite millions it has spent on PR campaigns, the corn ethanol lobby just can’t get anyone to buy that their product is environmentally friendly or will ever make a serious dent in America’s oil consumption. Well, except sportswriters. But really, when an industry relies on NASCAR to show that it’s environmentally friendly, it’s apparent that it’s jettisoned everything but the pretense. As Mr. Ihnen clearly acknowledged, corn ethanol was never about helping consumers with high gas prices or reducing dependence on foreign oil.

For the corn growers, it's created another market for our product," Ihnen said in a telephone interview. "We're good at producing corn - usually too much, so it depresses prices. Now, we've created another market besides livestock, food and export for our product. Just like any business, our goal is to get as much of our product in the marketplace as we can. The ethanol industry has allowed us to do that.”

Congress took a needed first step last week toward a sounder federal agriculture policy. Times are very good for commodity crop growers, and in a time of fiscal uncertainty, the federal dollars being funneled to the largest, wealthiest corn farms in America can be put to better use.