links about us archives search home
SustainabiliTankSustainabilitank menu graphic
SustainabiliTank

 
 
Follow us on Twitter

 

Posted on Sustainabilitank.info on June 23rd, 2008
by Pincas Jawetz (pj@sustainabilitank.info)

Senator Obama has obviously sworn allegiance to the Democrats, while Senators McCain and Bob Dole have their allegiance to the Republicans. Obama and Dole come from Corn States, while McCain does not. Actually the seven Mid-West Agricultural States account for 14 US Senators, and they voted en-bloc when it came to dish out subsidies to US agriculture. McCain did not have such a constituency – so he may have thought of himself independent from the agricultural interests. Without understanding these realities, the US Corn Dance looks as if it were a 20th century witches dance. If one is ready to try objectivity – then it was Senator Bob Dole who 30 years ago pushed for making ethanol an Archer Daniels Midland product. It was their product, because they had an integrated production system that would not just make ethanol, but also corn syrup, fructose, animal cake as animal feed, corn oil, various chemicals – in effect the joke in Washington was that their “Corn Refinery” uses all parts of the corn except the sequel of the pig. The result that no-one could compete with ADM and the amount of ethanol produced in the US, in spite of all those subsidies,   was thus determined by ADM. Senator Bob Dole also made sure that no foreign ethanol could undersell them (read Brazil’s sugar cane ethanol was kept out by imposing duties – so – to the hell with national interests when it comes to ADM profits – and tax imports of ethanol but not imports of petroleum. Senator Percy of Illinois, also a Republican,   on his way out from US Senate, saw the need to allow imports of sugar-cane ethanol from Brazil – for national security reasons – and also in order to help eventually enlarge the size of the market for US corn-ethanol or sugar-beet ethanol. If Senator Obama, on his way in, decided that the State of Illinois is helped by continuing the pro-US-corn-ethanol agriculture policy, that was his way of reacting to his home-State. If Senator McCain is for removing the tariff from the Brazilian ethanol so it can enter the US – he is right on this and just remember that very little corn is grown in the Arizona desert.

But above is just a fraction of the real story – that part that keeps Senator McCain nailed to his Republican roots deep in the oil-well. So, the Renewable Fuels Association, friends of the US corn-growers, are right in pointing out that if the ethanol would be pulled off the US fuel market this would now be a disaster because it would throw the US even more into the arms of the petroleum-merchants. The trick is thus to find a way how to allow the continuation of the US production while also to open the door to Brazilian ethanol. If the US move across the fuel pool for a composition of 90% gasoline – 10% ethanol mix – the size of the market would be so large that it would accommodate all interests – and while using the ethanol in that mixture as the octane enhancing additive of choice (yes – mandated by the government like Senator Frank Church of Idaho, a Sugar-beet State, was asking in his 1978 US Senate bill – that would decrease the reliance on oil not just by 10%, but actually by 16% by negating the energy intensive process of making the octane component of gasoline by changing the molecular structure of the hydrocarbons from oil. But then – no interest in Washington has come out recently with this sort of thinking – not the two contenders for the Presidency, nor the agricultural lobby.

We write this because of the following two articles – one from the New York Times resident correspondent in Brazil, and the other one from reports on the Midwest floods. Our suggestion is thus – lay off from Obama, continue the present US corn-ethanol production, but do not enlarge on it. Instead – open the door to the Brazilians. That would be the best for all except the merchants in oil. We will separately report also on the Brazilian Energy Conference that brought also today, some of the most important forces from Brazil to New York for an 8:30-13:30 conference at the Waldorf-Astoria Hotel, New York City.

The articles are:

Obama’s Corn Dance. By Larry Rohter, the NYTimes resident correspondent in Brazil, June 23, 2008. “And as befits a senator from Illinois, the country’s second largest corn-producing state, [Sen. Barack Obama] delivered a ringing endorsement of ethanol as an alternative fuel [when VeraSun Energy inaugurated its new ethanol processing plant last summer in Charles City, Iowa]… When it comes to domestic ethanol… [Obama] also has advisers and prominent supporters with close ties to the industry… [His] lead advisor on energy and environmental issues, Jason Grumet, came to the campaign from the National Commission on Energy Policy, a bipartisan initiative associated with [former Majority Leader Tom] Daschle [from South Dakota] and Bob Dole, the Kansas Republican who is also a former Senate majority leader and a big ethanol backer who had close ties to the agribusiness giant Archer Daniels Midland. Not long after arriving in the Senate, Mr. Obama himself briefly provoked a controversy by flying at subsidized rates on corporate airplanes, including twice on jets owned by Archer Daniels Midland… the nation’s largest ethanol producer… based in his home state… Mr. McCain advocates eliminating the multibillion-dollar annual government [ethanol] subsidies… As a free trade advocate, he also opposes the 54-cent-a-gallon tariff that the U.S. slaps on imports of ethanol made from sugar cane, which packs more of an energy punch than corn-based ethanol and is cheaper to produce… Mr. Obama, in contrast, favors the subsidies, some of which end up in the hands of the same oil companies he says should be subjected to a windfall profits tax… He also supports the tariff.”

and

Flooding Muddies the Push for Ethanol. By David Shepardson, Detroit News, June 23, 2008. “Massive flooding in the Midwest has ruined millions of acres of crops, spurring record corn prices and raising serious questions about whether the U.S. can meet new requirements for using corn-based biofuels… A sweeping federal energy bill signed into law in December requires the production of 9 billion gallons of biofuels this year, nearly all of it corn-based ethanol, up from 6.5 billion in 2007… [although] a backlash is emerging… The damage to the corn crop — as much as 4% of total U.S. corn production, or 3.3 million acres, could be lost — is pushing up ethanol prices… The wholesale price… rose 40 cents a gallon in the last month as corn prices have doubled in the past year to an all-time high of nearly $8 a bushel. Some energy analysts now say the government may have to suspend the biofuels mandate because at those prices it’s not profitable to make [the fuel], and because 400 million gallons of production has been lost because of the floods. [But] Bob Dineen, president of the Renewable Fuels Association, said ethanol is still a good deal. ‘Abandoning our commitment to ethanol and biofuels… would absolutely force the price of gas through the roof and require the import of more record-high foreign oil.’ [Besides,] Congress isn’t likely to pull back on the biofuel mandates in an election year, despite the continuing rise in food prices and the challenges that now exist because of the floods. Additionally, support remains strong in farm states to leave the mandates in place.”

Be Sociable, Share!

Leave a comment for this article

###