oil rig/corn fieldDrilling for oil in a corn field: will Big Oil squeeze out King Corn?Back in March, Tom Philpott flagged some moves from Shell Oil and Valero Energy (the largest U.S. oil refiner) that indicated Big Oil was falling for biofuels. Now, the NYT shows Tom had it right with a piece detailing the increasing amount of money Big Oil is spreading around to biofuel startups. This comes despite Big Oil’s historical hostility to the ethanol industry. In fact, their objections to conventional ethanol might sound strangely familiar:

For decades, the big oil companies and the farm lobby have been fighting about ethanol, with the farmers pushing to produce more of it and the refiners arguing it was a boondoggle that would do little to solve the country’s energy problems.

Oil companies still dislike corn ethanol, dubbing it corrosive and inefficient. Instead, their new investments are in second generation biofuels that use non-food crops, waste wood, and garbage as feedstocks.

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If I were the National Corn Growers Association, I think I might start getting nervous. They’re already in the fight of their lives with the EPA and Congress over corn ethanol’s place in the Renewable Fuel Standard and cap-and-trade legislation. Now they have to deal with Big Oil as a direct competitor. And it’s not too much of a stretch to conclude from the article that Big Oil wants nothing more than to put corn ethanol on the ashheap of history — if only because Big Oil still retains a fondness for grinding its competitors into the dust.

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I’m not suggesting, of course, that Big Oil is anyone’s savior. And their involvement doesn’t guarantee that the technical problems that have limited the development of cellulosic ethanol will be quickly solved or that the issues surrounding land use for growing plants of any kind for fuel can be ignored. That said, the need for liquid fuel will not evaporate when the last drop of oil is pumped from the ground — and Big Oil’s freshly kindled interest in alternatives suggests they see that day coming just like the rest of us.

Meanwhile, industrial corn and soy farmers have been more or less unopposed in the biofuels marketplace. And for all its nods toward second gen fuels, the ethanol industry as its currently consituted has had no meaningful incentive to move aggressively away from corn ethanol. It’s no wonder really that House Ag Chair Rep. Collin Peterson likes talking down the potential for cellulosic ethanol — what he and his friends at the NCGA and Growth Energy have going is too good to mess with. Perhaps Peterson’s fury over Waxman/Markey is due to the fact that he can read the writing on the wall as well as anybody — and with Big Oil getting involved, the end of corn ethanol’s reign may come sooner than we think. Frankly, I wouldn’t wish Big Oil’s competitive ire on anyone. Well, anyone except the NCGA and Collin Peterson, that is.


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