GoodFuels

A Christmas Miracle

Interesting story from AP this week seems to show a miraculous epiphany on the part of the Grocery Manufacturers Association.

The article attempts to answer the question “Now that corn prices have plunged, is the ethanol industry still in the hot seat for driving up prices?” They apparently asked GMA’s Scott Faber for his thoughts.

I think we could call that a Christmas miracle.

Happy Anniversary Ethanol

It will be interesting to see how the assault on ethanol by a food industry-backed organization will be portrayed in the media. I hope they can see through this blatant attempt to justify higher food prices by continuing to disparage the ethanol industry.

“On the occasion of the 30th anniversary of ethanol subsidies,” the group Food Before Fuel called for a repeal of “subsidies for ethanol in light of its harmful effects on the environment, consumers and numerous industries.”

Now, they released a poll that asked obviously leading questions to prove that the majority of Americans support them. It showed that a majority are concerned about the rising cost of food. That’s understandable. Then the poll goes on: When provided with information about USDA data showing corn ethanol production is the cause of 10 percent of food price inflation, nearly half (49%) become less likely to support policies aimed at promoting the use of corn to produce ethanol. Moreover, when asked if they would support keeping or changing the existing Congressional policies, a majority (56%) of respondents call for Congress to change these policies by reducing or eliminating subsidies and mandates for the use of corn ethanol.

How about if you provided them with information about the profits of companies like Kraft, Kellogg, Sara Lee, and Dean’s Foods - especially in the most recent quarter since corn and oil prices have dropped significantly? Might have different results.

I did tune in for the press conference today during the Cellulosic Ethanol Summit. There were a few questions from the live audience, but the phone system must not have been working because “they had no questions from the phones” even though I was pushing the right buttons! One reporter did ask the organization if it was “collaborating with the oil companies” who might also like to see ethanol subsidies go away. The answer was “not on a regular basis” only during certain times like during the energy bill debate.

The speakers for the group played on the analogy that ethanol was a 30-year-old “problem child” still living in the basement who needs to get kicked out of the house. Renewable Fuels Association president Bob Dinneen said, “It’s a cute analogy but the problem is there’s somebody else living in that house and it’s the 120-year-old oil industry that continues to be subsidized.”

“We’re celebrating today as well,” Dinneen said. “We’re celebrating 30 years of giving back to this country in terms of increased economic development, reduced farm program savings, lower balance of trade, reduced emissions attributable to renewable fuels. This is a 30 year success story and not one you want to kick out of the house.”

Happy anniversary, ethanol!

Frivolous Lawsuit

More often than not, the phrase “frivolous lawsuit” is somewhat redundant. Such is the case with San Antonio-based fuel refiner Tesoro, which has filed a lawsuit in California to block a regulation that would boost ethanol consumption in the state by 2010.

The company, which operates refineries in Los Angeles and the city of Martinez, says “the new fuel specifications could conflict with the state’s push to cut greenhouse gas emissions and could have ramifications for the environment and U.S. food prices.”

The New Fuels Alliance, a group that includes the California Renewable Fuels Partnership, calls the suit “a blatant attempt by Tesoro to try to use the regulatory and legal process to gain competitive advantage in the market place.”

A statement by the alliance continued, “Other oil companies are moving toward increased ethanol use to extend gasoline supply, lower cost, and even increase profits. Tesoro didn’t see this market shift coming and is now trying to gum up the works based on a feigned and disingenuous concern about climate change and food prices.”

The LA Times blog GreenSpace notes rightly that the “text of the lawsuit, filed in Sacramento Superior Court, says precious little about Tesoro’s worries over food supply and prices. Rather, the company’s core complaints are that California Air Resources Board’s new rule: takes effect too quickly, forces companies to pay for emissions offsets if they don’t meet the 2010 deadline, and requires expensive refinery modifications that might not be compatible with California’s still-evolving Low Carbon Fuel Standard.”

Reporter Elizabeth Douglass concludes, “The problem for Tesoro and other refiners is that the whole move to biofuels is eating away demand for its products. That might have something to do with the company’s sudden concern about ethanol’s impact on the environment and the nation’s food supply.”

Nice to see even the LA Times can see through this charade.

Post Update: Make sure to check out the post on the GreenSpace blog and add your comments as they are running 3 to 1 against Elizabeth’s observations.

Good Fuel in Maryland

Here’s a great story about ethanol in Maryland from the Baltimore Sun, written by Ted Shelsby “On the farm.” I didn’t even know they still had farm reporters for newspapers in major metro areas on the east coast!

The story talks about the opening of E85 pumps in Maryland at stations in Rockville, Frederick, Takoma Park and Germantown. It quotes Lynne Hoot, executive director of the Maryland Grain Producers Association, as saying that E-85 was not only putting more money in the pockets of motorists, it was also helping farmers pay their bills.

It also quotes Maryland Governor Martin O’Malley from a press conference he held last month announcing the four new E85 stations. In a press release from that announcement, O’Malley said, “With these new E-85 facilities, we’ll continue to make Maryland’s transportation fleet less dependent on fossil fuels, strengthening the energy future of our State for generations to come. These upfront investments in our alternative fuel infrastructure position Maryland to take advantage of the rapid advances in the next generation of non-food-based ethanol while reducing greenhouse gas emissions.”

It’s very important to notice that he made the point that investing in first generation ethanol will help advance the next generation of the fuel. That shows great foresight that some other governors could use - like maybe Rick Perry of Texas?

It’s also important to note that Maryland is a pretty big poultry producing state and there are no quotes in the article from poultry producers complaining about ethanol production, which is interesting, but it does point out that ethanol has helped increase grain prices for farmers in Maryland and lower gas prices for consumers. Unusually one-sided reporting in favor of ethanol - kind of refreshing!

Unhappy Reactions to EPA Decision

Within 30 minutes of the EPA announcement that the request for a waiver of the Renewable Fuels Standard had been denied, members of the Big Food coalition held a press conference to express their disappointment.

Representatives from the National Turkey Federation, American Meat Institute, National Chicken Council, Texas Cattle Feeders, American Bakers Association, and American Beverage Association recited a litany of woes that will now befall the country as a result of the decision, predicting that within 2-3 years we will face food shortages and be forced to increase imports to meet our needs.

Once they opened it up for questions, however, reporters seemed less than sympathetic. The first questioner was Matt Wald of the NY Times, who challenged them to explain why they were pushing for a waiver when it seemed evident that demand for ethanol was driving production more than the RFS. This appeared to catch the food group totally off guard, so much so that Scott Faber of the Grocery Manufacturers Association had to jump in from the sidelines to try and cover for them. To really appreciate this, you have to listen to the entire eight minute exchange, complete with pauses, stumbling and mumbling.

Another great question came from Lynn Henderson of Agrimarketing Magazine, who asked “In light of these higher grain prices, why is it that many of the major food companies are reporting record profits?”

Faber answered that the food manufacturers were “finding ways to reduce costs” and are doing “extraordinary things to avoid passing the costs” on to consumers. Riiight - that’s it.

One more thing that I found interesting about the press conference was the opening statement from the American Bakers Association representative, who commented that Kansas now produces more corn per acre than it does wheat. When I checked that out, I discovered he was right. Kansas does produce more corn PER PLANTED ACRE than wheat. Last year, Kansas harvested 518 million bushels of corn from 3.7 million acres of corn - but less than 284 million bushels of wheat from 8.6 million acres. With wheat yields at 33 bushels an acre compared to 140 bushels for corn - every acre of corn produces more bushels compared to an acre of wheat! Point being, that is the kind of misleading rhetoric this group uses to try and make people believe that corn for ethanol is causing the prices for all commodities to go up.