GoodFuels

Brazil to challenge US tariff?

Reuters has posted a story this morning in which they report that Brazil has hired lawyers to look into the current US import tariff against Brazilian ethanol.

“Brazil’s Sugar Cane Industry Association hired lawyers to study the compatibility between the U.S. tariff and WTO rules. The collapse of the Doha Round of world trade talks in July made litigation against the United States more likely.

 Amorim said the case could be presented in the next one or two months, depending on final consultations with producers and the government’s lawyers.”

“My reading is that we have a very strong case and so there is a good chance we will challenge,” Reuters reports Foreign Minister Celso Amorim said on Tuesday.

What will this possible litigation mean for the future of the domestic US ethanol industry? Leave your thoughts in the comments.

Read the whole report here.

The Politics of Ethanol

(This was published Friday, August 31, 2008 in The Ethanol Monitor)

As I reviewed the volumes of information we have gathered over the past 18 months, I couldn’t help but wonder how the ethanol industry survived the massive campaign against it and I can only conclude that strong political support has managed to beat back challenge after challenge designed to undermine and slow its evolution.

Now it comes down to two candidates and two parties, a decision which could bolster or weaken the industry for years to come. No matter how you slice it, this election is pivotal for the future of ethanol in the U.S.—and that includes corn-based and next generation fuels.

This is not about endorsing one candidate or another, but rather pointing out the differences between the two, how their visions contrast with respect to energy and America’s future, both from the standpoint of our addiction to oil and how the U.S., the leading polluter on the planet, should be taking the lead in reducing the potential impact of global warming.

In several instances over the past four years I have had the privilege to meet many in the ethanol industry, and when asked why I ever got involved in this field, my answer is always the same. I have been writing about energy of all types for longer than I care to remember. The oil and gas industries fascinated me simply because I quickly recognized the importance these commodities had to the well being and advancement of civilization, but how politically fractious they were and how nations would take up arms to protect their share of these precious resources.

Russia’s sudden invasion into Georgia recently, the latest in the Soviet Union and now Russia’s desire to control the resources of its presumed empire, is just the most recent reminder of how oil and gas power corrupts.

But my answer as to why I ever got involved with ethanol at all goes back to September 11, 2001. That changed everything and brought to the forefront that we could no longer depend on oil to fuel growth.

The single belief should be that the national security threat to dependable oil resources is not acceptable. From corruption in Nigeria to a semi-dictatorship in Venezuela, to Russian resource expansionist policies represent just a few of the challenges the oil dependent world faces in the years ahead. To the U.S., the threat of Islamic extremism centered in the oil capitols of the world may be more publicized, but no more dangerous than the many geopolitical issues that surround what is the thread that holds together the world’s economies.

More than any other reason, ethanol became a necessity, but it wasn’t always that way.

(more…)

Food Versus Fuel is Fallacy

An analyst with a major agricultural financial institution says “food versus fuel” is basically a misleading sound bite.

According to Karol Aure-Flynn, executive director of the Rabobank Food and Agribusiness Research and Advisory department, “The fallacy of the headline is that there is a direct competition between the two; that it’s either/or. The reality is that strong global economic growth has changed the demand equation for U.S. commodities.”

Aure-Flynn also noted in a recent Rabobank podcast that while prices at the farm level have increased this year, they have been outpaced by production costs for farmers.

“Farmers’ profitability doesn’t change retail prices. And farmers’ profitability isn’t guaranteed by high grain prices. The same factors that are lifting grain prices are lifting production costs,” said Aure-Flynn. “So, yes, the farm price index is at 162 percent of what it was 1990-1992, but at the same time the price index measuring what farmers pay — for services, farm wages — is 189 percent of base.”

Rabobank is a global financial services leader providing institutional and retail banking and agricultural finance solutions in key markets around the world.

Waiting for Word on Waiver

The ethanol industry is holding its collective breath today as the highly-anticipated decision by the Environmental Protection Agency on whether to grant a partial waiver of the Renewable Fuels Standard will be announced Thursday afternoon.

EPA Administrator Stephen Johnson and Principal Deputy Assistant Administrator Robert Meyers will hold a press conference at 1 pm eastern time to officially answer the request from Texas Governor Rick Perry to cut the RFS ethanol blending requirements by 50 percent.

According to the Houston Chronicle, Gov. Perry sent a letter to Johnson this week responding “to challenges to his request filed with the environmental agency after the public comment period ended July 23. Fifty-five pages accompanied the letter.”

In his letter, Perry acknowledged that corn, diesel and crude oil prices have “retreated” in the past month. But, he wrote, “the fundamental problems adversely affecting our well-being remain and could worsen when those prices begin to escalate again, as they probably will.”

“This view is contrary to what would seem to be conventional wisdom and as espoused by the proponents of the ethanol mandates who claim that ethanol is suppressing the price of gasoline at the pump. But it is true nonetheless.”

Gotta love that - contrary to conventional wisdom but true nonetheless - because two “experts” say so. But, as Mark Twain once said, truth is more of a stranger than fiction.

We await the decision of the judges.