The corn industry hopes Congress will pull its fat out of the fire
I used to love to start my writing day by taking a poke or two at the corn-based ethanol industry — you know, the biggest greenwash ever.
These days, the debunking of corn fuel almost seems like it’s piling on. Today, two major newspapers — the LA Times and The Wall Street Journal — ran front-page stories that essentially say: everyone hates government support for corn-based ethanol, except for people with a direct financial (or political) stake in it.
A couple of years ago, I enjoyed a snippy back-and-forth with someone from the Minnesota branch of the American Lung Association, an enthusiastic ethanol booster on air-quality grounds. More recently, the Journal reports, the national ALA is raising concerns that mixing ethanol into gasoline actually worsens air quality. Ouch.
If the marketplace of ideas has found ethanol wanting, the real market has frowned upon it as well. The price of ethanol surged last year after it received a slew of goodies in the 2005 energy bill, but has since plunged because of oversupply. According to the Journal, ethanol producers were wracking up nearly $3.00 in profit for every gallon they produced in mid-2006. Today, they make about $0.25 per gallon in profit.
But don’t shed any tears for ethanol makers; it looks like Congress is about to come to their rescue in the energy bill.
As the Journal and the LA Times pieces show, congressional ethanol boosters have been having a much harder go of it than expected in ramping up federal requirements for "renewable" fuels in the energy bill.
Things started smoothly enough for ethanol boosters. Buoyed by President Bush’s steadfast support for corn liquor as fuel, the Senate’s version of the energy bill would have raised the renewable fuel standard to 36 billion gallons by 2022 (up to 15 billion of which can come from corn).
By the time the House began debating the energy bill, though, the public outcry against ethanol had become so loud, and emanated from so many quarters, that ethanol boosters faced a rout. As of Tuesday, the House version contained no renewable fuel standard.
While the people who benefit from corn ethanol may be small in number, they wield impressive power. Bloomberg reported Wednesday that the House is about to cave in. Under the plan that looks set to pass, gasoline mixers will "have to use 20.5 billion gallons of corn-based ethanol by 2015." That would nearly triple the 7 billion gallons churned out this year.
One commodity-market analyst put it bluntly, Bloomberg reported:
“A move in Washington to expand renewable fuels mandates would improve ethanol demand and boost corn usage,” said Jerry Gidel, a market analyst for North American Risk Management Services Inc. in Chicago. “The political climate for biofuels is improving.”
The news pushed up the price of corn.
Looks like we’ll have corn-based ethanol to kick around for a while. It’s fun to bash, but I’m getting tired of it. I wish it would just go away.