GoodFuels

Supporting McCain in Spite of Ethanol Policies

It has been interesting hearing pro-agriculture and pro-ethanol Republicans who support Senator McCain despite his ethanol policies. He has been very clear where he stands on ethanol, saying during the most recent debate that he opposes subsidies for ethanol because they distort the market and create inflation and that he would eliminate the tariff on imported sugar cane based ethanol from Brazil.

Recently I asked Secretary of Agriculture Ed Schafer what he would say to Senator McCain about his farm policy in general and ethanol in particular. “What I would say to Senator McCain is this: ‘You’re flat out wrong about your agriculture policy,’” Schafer said bluntly. “The agriculture community by and large is conservative and agrees with you about government intervention and government mandates and government costs and taxes - there are a wide variety of things I agree with Senator McCain on.”

“While I vibrate some when I hear Senator McCain say no ag policy, no ethanol mandates, no support for these important public policies,” Schafer said, he hopes that Senator McCain gets some advisers who can help him see that “agriculture is the foundation of the economy and the strength of this country.”

Listen to Schafer’s comments here:

I also asked Senator Chuck Grassley recently if he is concerned about Senator McCain wanting to do away with ethanol incentives. “Not as long as I’m in Congress,” Grassley said. “When he’s president of the United States, we’ll still be developing an ethanol industry.” Grassley is one of the co-chairs of the McCain-Palin Farm & Ranch Team National Steering Committee.

Last week, former deputy USDA secretary Jim Moseley, speaking on Agri-Talk had to defend and explain McCain’s ethanol policy. “Now I have to tell you as a farmer and a person involved in agriculture all my life, and of course as a former deputy secretary of USDA, politically I would have to advise Senator McCain to avoid this issue,” Moseley said. “I think that tells us a little bit about who he is as a person and how deeply he feels about some of these issues.”

When asked directly why investors in the ethanol industry should support a McCain presidency, Moseley responded that he would support ethanol on the demand side. “You’ve got to keep the demand obviously ahead of the supply and that’s where the investment then, the tax credits need to be made,” Moseley said.

Ethanol Report on World Food Prize

Biofuels in general and ethanol in particular were part of the discussion at the World Food Prize symposium in Des Moines this year. Despite the food versus fuel controversy that permeated the headlines for 2008, there seemed to be more acceptance of biofuels as being able to co-exist with food production and being part of the overall global agriculture picture. It wasn’t all positive, but frankly much better than I anticipated covering the event.

This Ethanol Report podcast features comments made at the World Food Prize events last week by UK Scientific Advisor Sir Gordon Conway, International Biofuels Commission co-chair Roberto Rodrigues, World Bank president Robert Zoellick, former senators George McGovern and Bob Dole – this year’s World Food Prize recipients, and Secretary of Agriculture Ed Schafer.

You can listen to “The Ethanol Report” on-line here:

Or you can subscribe to this podcast by following this link.

More detail from the World Food Prize, including full remarks and photos, can be found here at DomesticFuel.com.

Sticky Prices

Higher food prices may have more sticking power than gum on the bottom of a shoe.

The reason being given by the economic experts is “sticky prices,” according to this AP story. “That’s what analysts call it when companies slap higher prices on products and keep them there even though the rationale for the price hikes — such as soaring oil prices — is gone,” the story says.

The Renewable Fuels Association already made that point last week with a report that asked the question, “Will the plunge in grain prices mean lower food prices at the supermarket?”

As the RFA report states, ”… it seems highly unlikely that reduced grain and oilseed prices alone will lead to lower retail food prices, as there are many complex factors that influence retail food pricing.” This despite hysterical claims earlier this year by food companies that ethanol production was the reason for higher grain prices and ultimately higher food prices.

The report concludes, “Without question, the plunge in commodity prices in the last several months has disproven the unsupported claim that biofuels production was the dominant factor driving grain and oilseed prices higher.”

Along the same lines, on World Food Day last week, FoodPriceTruth.org launched “Operation Missing Cookie”.

Operation Missing Cookie! was initiated after FoodPriceTruth.org discovered Kraft’s decision to shrink Chips Ahoy packages by 5%, from 16 oz. to 15.15 oz, while selling the cookies for the same price. Kraft pointed the finger at higher operating costs, but their profits are up 24% this year compared to last year.

FoodPricetruth.org called recent statements from companies like Kraft and Nestle misleading and disingenuous. “These companies pretend that they are suffering at the hands of higher energy and grain prices like average Americans, but it’s really about squeezing more money out of the consumer.”

Sticky prices simply mean that food companies are sticking it to consumers - and that’s even more disgusting than finding gum on the bottom of your shoes.

Pipe Dream

Ethanol critics often like to use the argument that ethanol cannot be shipped through pipelines and therefore is not a real fuel option.  According to pipeline company Kinder Morgan, that claim is simply not true.

According to Brett Clanton at the Houston Chronicle:

“Houston pipeline operator Kinder Morgan Energy Partners signaled progress Wednesday in addressing a key hurdle to widespread distribution of renewable fuels in the U.S.

“The company said it completed a test in Florida that moved ethanol safely through an existing gasoline pipeline and is performing similar tests with biodiesel fuel blends.”

The success of Kinder Morgan’s testing demonstrates that any technical concerns that may exist can be overcome.  As the production and use of biofuels expands across the country, the need to move product through a pipeline is likely gain in importance.  We now know (and have for some time, frankly, just ask Brazil) that ethanol can safely be transported through existing pipeline systems.

Count this as yet another myth about ethanol debunked.