DAILY NEWS SUMMARY Thursday, July 3, 2008
International 1. Exxon and Chevron study new biofuels and shun food-based fuels International Herald Tribune http://www.iht.com/articles/2008/07/03/business/03bio.php “Exxon Mobil, Chevron and other major international oil companies are seeking technology breakthroughs to make gasoline and diesel from renewable sources as they shun fuel from food crops.” National 2. Houston Chronicle: Perry Pushed For Ethanol Waiver After $100K Donation CBS News http://www.cbsnews.com/stories/2008/07/02/politics/politico/thecrypt/main4228863.sht ml “The Houston Chronicle is reporting that Texas Gov. Rick Perry (R) sought a waiver from federal ethanol mandates after a corporate donor gave $100,000 to the Republican Governors Association, which Perry chairs.” (See article below) Regional 3. Perry-led group got $100,000 before waiver request The Houston Chronicle http://www.chron.com/disp/story.mpl/ap/tx/5868748.html This story is an update from yesterday’s Associated Press story (also in the Houston Chronicle) titled “$100,000 gift led the attack on ethanol” “An East Texas poultry
producer gave $100,000 to a group chaired by Gov. Rick Perry six days after a meeting that prompted the governor's request for a waiver of federal ethanol mandates that the industry believes are driving up feed costs, according to newspaper reports.” 4. Kolsrud rewarded for dedication to ethanol Brandon Valley Challenger (SD) http://www.brandoninfo.com/apps/pbcs.dll/article?AID=/20080703/NEWS/80702002/1 001 On June 17, David Kolsruk owner of DAK Renewable Energy, received the 2008 High Octane Award from BBI International at the national Fuel Ethanol Workshop in Nashville, Tenn. 5. Salazar critical of Big Oil Steamboat Pilot and Today (CO) http://www.steamboatpilot.com/news/2008/jul/03/salazar_critical_big_oil/ “Is the oil and gas industry manipulating prices? I would say so. My numbers show that production was at 80 percent during Memorial Day when it is usually around 96 percent this time of year,” he said. “They try to blame the ethanol production (for high grocery prices), but let me tell you, the reason the food prices are so high is because 50 percent of grocery prices at the store is based on transportation, and transportation is driven up directly by the price of fuel.” 6. EPA considers requests on easing ethanol rules The Houston Chronicle http://www.chron.com/disp/story.mpl/business/5868938.html “The Environmental Protection Agency said it's reviewing congressional requests to relax rules mandating the use of ethanol, which some lawmakers say is straining corn supplies.” 7. Gas Stations Reject Ethanol Blends KOCO 5 (OK) http://www.koco.com/news/16774386/detail.html “Now that gas stations in Oklahoma are required to post the ethanol content of their gasoline, drivers can choose whether to use ethanol blended fuel. Chemistry professor
John Nail said even a small amount of ethanol decreases gas mileage and can damage the engine in cars that are not designed for it. "[Ethanol] will damage part of the seals and some of the materials in the engine," he said.” 8. U.S. urged to import, not make, ethanol Des Moines Register http://www.desmoinesregister.com/apps/pbcs.dll/article?AID=/20080703/BUSINESS0 1/807030365/1001/NEWS “The skyrocketing price of grain is bringing new pressure on American and European leaders to ease biofuel incentives, including the U.S. tariff on imported ethanol. The World Bank on Wednesday called for the United States and the European Union to roll back biofuel mandates, subsidies and tariffs as part of a 10-point plan to deal with soaring food costs in poor countries. The plan, which also proposes doubling agricultural aid, was prepared for the Group of Eight economic summit meeting next week in Japan.” 9. Clearfield County Officials Stand By Ethanol WJAC 6 (PA) http://www.wjactv.com/news/16774084/detail.html “The use of ethanol as fuel has come under fire from some politicians. Just last week, Texas Governor Rick Perry said federal ethanol programs are to blame for rising corn prices. In Clearfield County, two ethanol plants are under construction in Lawrence Township and Curwensville. County officials said they're not concerned about the current backlash against ethanol.” 10. Study calls ethanol mandate a billion-dollar mistake St. Louis Post-Dispatch http://www.stltoday.com/blogzone/mound-city-money/mound-citymoney/2008/07/study-calls-ethanol-mandate-a-billion-dollar-mistake/ “Predictably, the corn folks say the mandate has benefited Missourians — to the tune of $285 million this year and more than $2 billion over a decade. Show-Me’s Justin Hauke and David Stokes, however, say those figures omit some very large negatives. Specifically, they say the corn promoters are leaving out the cost to taxpayers, and they’re ignoring the fact that ethanol has a lower energy content than gasoline. Their bottom line is much different.” 11. E-85 vs. Octane
Indiana News Center http://www.indianasnewscenter.com/news/local/22840024.html “Even though the price of e-85 gasoline is a little cheaper than regular octane fuel, when you break down the numbers it may not actually be worth the few cents saved for every gallon of gas.” 12. Citing food prices, new coalition forms to kill biofuel mandate The Belmont Citizen-Herald (MA) http://www.wickedlocal.com/belmont/news/x2010602226/Citing-food-prices-newcoalition-forms-to-kill-biofuel-mandate “Harnessing reports that corn-based fuels are driving up food prices, a coalition of retailers, environmentalists and hunger organizations are mounting a campaign to undercut Congressional mandates to produce billions of gallons worth of such fuels. Backed by Congressman James McGovern, the Food Before Fuel Campaign argues that corn grown to produce ethanol has become more common on land that’s traditionally been used to grow food crops, sending prices for corn, soy and other farm products soaring.” Trade Publications 13. Ethanol: key senator urges tariff overhaul as Brazil eyes U.S. market E & E News “Lawmakers opposed to the import tax on foreign ethanol today gained a powerful new ally from the Corn Belt as Sen. Richard Lugar (R-Ind.) called for the elimination of the U.S. tariff on foreign ethanol as part of a larger platform of food and fuel policies.”Subscription site, please see PDF for complete text. Opinions & Editorials 14. Stop requiring ethanol production Los Angeles Times http://www.latimes.com/news/opinion/editorials/la-ed-ethanol32008jul03,0,537121.story “The EPA should waive the ethanol requirement, but if that's the only outcome of the ethanol brouhaha, the country will still lose. Lawmakers should see this as an important lesson: Tinkering with energy regulation can have disastrous consequences,
especially when it's done on behalf of special interests rather than the national interest. Given the number of phenomenally bad proposals for lowering oil prices floating around the Capitol, this lesson could not come at a more critical time,” The Times’ editorial board writes. Blogs & Websites 15. Just a Spoonful of Sugar…Ethanol The New Republic http://blogs.tnr.com/tnr/blogs/environmentandenergy/archive/2008/07/02/just-aspoonful-of-sugar-ethanol.aspx “Ethanol, the much-maligned biofuel of the hour, is gaining some traction on the Hill. Today I attended a conference on the global food and energy crisis at the American Enterprise Institute, where Senator Richard Lugar argued (pdf link) that the United States should lift its existing 54-cent tariff on imported sugarcane ethanol from Brazil: There are striking examples in oil and natural gas, where increased political interference puts upward pressure on price…To demonstrate leadership, the United States should lift its tariff on Brazilian ethanol that now shelters the U.S. industry.”
1 International Herald Tribune July 3, 2008
Exxon and Chevron study new biofuels and shun foodbased fuels
Bloomberg News MADRID: Exxon Mobil, Chevron and other major international oil companies are seeking technology breakthroughs to make gasoline and diesel from renewable sources as they shun fuel from food crops. Companies are researching ways of making fuels from waste products and non-edible plants to supplement traditional oil supply. The executive director of the International Energy Agency, Nobuo Tanaka, said Wednesday that he was "cautious" about so-called "first- generation" biofuels made from corn and sugar because they compete with food requirements. "We are looking at the next generation of biofuels and our program in that area is very active," Rex Tillerson, the chief executive of Exxon, said this week at the World Petroleum Congress in Madrid. "We're looking where we can add value so it can be meaningful to us and our shareholders." New resources will help meet energy demand that's set to rise by more than 50 percent by 2030, spurred by rallying oil prices that reached a record above $145 a barrel Thursday. Biofuels production worldwide, led by the U.S. and Brazil, is expected to rise by 330,000 barrels a day this year, which is more than the gain in conventional crude output from any single non-OPEC country, according to the IEA. "We are focusing on next-generation biofuels," said John Watson, the Chevron Vice President for Strategy and Development. "We are not investing in food-based ethanol" research. Finding commercially viable alternative fuels could take as long as five to ten years, Geoffrey Goff, senior vice president for business development at ConocoPhillips, said in an interview today in Madrid. The U.S. oil company is researching only biofuel sources that don't rely on food while continuing to produce corn-based products to meet government-mandated ethanol quotas, he said. Companies and governments are seeking to use power and fuel more efficiently and create energy from sources like the sun or wind to reduce global warming caused by
combustion fuels. They must also balance making fuel from plants with the need to leave edible crops, farm land and water for food production. "Everyone recognizes today that biofuels are a great idea but you cannot really exploit this resource and have food prices skyrocketing around the world," Paolo Scaroni, the chief executive officer of the largest oil producer in Italy, Eni, told reporters in Madrid. Investment in the technology remains a fraction of spending on traditional crude and natural gas reserves as companies seek to find fuels that will be economically viable. Exxon has invested as much as $1 billion a year in all research and development activities over the past decade and will continue doing so, Tillerson said. That compares with average companywide spending of about $25 billion a year, covering exploration, refining and other activities. "Renewables are not the main business of the oil companies, which have to justify returns for investors," said Davide Tabarelli, director of Nomisma Energia, a Bologna, Italy-based energy research company. "Still, biofuels is the most logical segment of renewable energy for oil companies to invest in," because they produce transportation fuels, he said.
2 CBS News July 2, 2008
Houston Chronicle: Perry Pushed For Ethanol Waiver After $100K Donation
(The Politico) The Houston Chronicle (hat tip propublica.org) is reporting that Texas Gov. Rick Perry (R) sought a waiver from federal ethanol mandates after a corporate donor gave $100,000 to the Republican Governors Association, which Perry chairs. Lonnie 'Bo' Pilgrim, of poultry producer Pilgrim's Pride, is concerned that ethanol mandates drive up the price of corn, which ethanol is made from, thereby raising costs for the poultry and livestock industries. "Gov. Rick Perry's request for a waiver of federal corn-based ethanol production mandates was prompted by a March meeting he had with East Texas poultry producer Lonnie 'Bo' Pilgrim, who six days later gave $100,000 to the Republican Governors Association chaired by Perry," the Chronicle reported. "In the three weeks following that donation, Perry's staff began preparing to submit the renewable fuel standards waiver request to the federal Environmental Protection Agency, according to 596 pages of records obtained from the governor's office by the Houston Chronicle under the Texas Public Information Act." The Chronicle added: "Perry's April 25 waiver request has national implications because an EPA waiver of renewable fuel standards would affect all ethanol production in the United States, not just in Texas. On Monday, more than four dozen House Republicans made a similar plea to the EPA, asking for a reduction in ethanol production mandates." Perry is seeking to cut the ethanol mandate, 9 billion gallons in 2008, by half. Nearly 50 House Republicans sent a letter to EPA on Monday making a similar request. About 30-35% of the nation's corn crop goes toward ethanol production. Bo Pilgrim and his family members have been big donors to the GOP and Republican lawmakers over the years, according to Federal Election Commission Records. For instance, Lonnie Pilgrim donated $25,000 to the National Republican Congressional Committee in March 2007, plus another $20,8000 directly to House Republicans, including $9,600 to Rep. Bob Goodlatte (R-Va.), ranking member of the Agriculture Committee. Ken Pilgrim, a senior VP at Pilgrim's Pride, gave $18,500 to the NRCC on May 12, 2008.
Pilgrim's Price PAC has also given out more than $37,000 to lawmakers this cycle, with 85% of that total going to Republicans, according to opensecrets.org. Pilgrim's Pride is the largest chicken processor in the United States, with sales in 2007 of $7.6 billion. It has more than 53,000 employees in the United States and Mexico, and approximately 6,400 "growers" supply it with chickens.
3 The Houston Chronicle July 2, 2008
Perry-led group got $100,000 before waiver request
AUSTIN — An East Texas poultry producer gave $100,000 to a group chaired by Gov. Rick Perry six days after a meeting that prompted the governor's request for a waiver of federal ethanol mandates that the industry believes are driving up feed costs, according to newspaper reports. In the three weeks following the donation to the Republican Governors Association from Lonnie "Bo" Pilgrim, Perry's staff began preparing to submit the renewable fuel standards waiver request to the Environmental Protection Agency, the Houston Chronicle and San Antonio Express-News reported in Wednesday's editions. The newspapers obtained 596 pages of records from the governor's office through the Texas Public Information Act. The donation, given March 31, also helped pave the way for Pilgrim to address nine Republican governors during a closed-door energy conference in Grapevine to explain his belief that ethanol production is increasing feed costs for poultry and livestock producers. Pilgrim is co-founder of Pilgrim's Pride Corp. of Pittsburg, the nation's largest chicken producer. Perry aide Allison Castle said political donors get nothing but "good government" from Perry. She said he asked for the waiver because of ethanol's potential negative impact on livestock and poultry producers. Perry is one of a number of politicians, livestock and poultry producers, and grocery manufacturers who have been calling for a reversal of the Renewable Fuel Standard that Congress approved last year. Opponents of the standard say the push to turn more corn into ethanol is raising food prices and the cost of feed for livestock. Castle said Perry is scheduled to meet with EPA Administrator Stephen L. Johnson this month. This isn't the first controversial donation involving Perry and the Republican Governors Association, which promotes Republicans and conservative philosophies. Houston homebuilder Bob Perry, not related to the governor, gave the group $1 million during the 2006 gubernatorial campaign. The association then gave a similar amount to Perry, who is now the group's chairman. Perry's April 25 waiver request has national implications because an EPA waiver of renewable fuel standards would affect all ethanol production in the United States, not
just in Texas. On Monday, more than four dozen House Republicans made a similar plea to the EPA, asking for a reduction in ethanol production mandates. Perry pressed for the waiver despite an April 10 Texas A&M University study that showed a waiver of federal mandates on ethanol production would have little or no effect in driving down the price of feed corn for poultry and livestock. The A&M study blamed rising corn prices on the cost of oil, global demands for corn and commodities speculation. At Perry's request, A&M did a second study that was released in June. It found that if corn crops were short because of Midwestern flooding, a waiver would significantly lower corn prices. The U.S. Department of Agriculture earlier this week reported that the corn harvest would be smaller than last year, but only because fewer acres were planted. Perry's staff coordinated preparation of the waiver request with Pilgrim's Pride lobbyist Gaylord Hughey of Tyler and Cliff Angelo with Public Strategies, the firm handling a public relations campaign against ethanol for Pilgrim's Pride and a coalition of meat producers. Jim Schwertner — president of Capitol Land and Livestock, a cattle dealer that feeds about 7,000 head each day — said he brought Pilgrim into discussions about obtaining the waiver. A Pilgrim's Pride spokesman said Pilgrim and Schwertner worked together to persuade state officials to seek the waiver. Schwertner and Pilgrim met with Perry on March 25. Schwertner said Perry was supportive of seeking the waiver from the start. In filing his waiver request, Perry sent a letter to all 22 of his fellow Republican governors asking them to join him. No other state joined the petition before the deadline passed, though opposition to the mandate also came from numerous members of Congress, including the GOP's presumptive presidential nominee John McCain and Texas Sens. Kay Bailey Hutchison and John Cornyn. McCain signed a letter to the EPA protesting the mandate less than two weeks after receiving a $1,000 donation from Schwertner, according to campaign finance records.
4 Brandon Valley Challenger (SD) July 3, 2008
Kolsrud rewarded for dedication to ethanol
By: Alica P. Thiele David Kolsrud has been in several countries and all around the United States. But he hasn’t seen the sights. Since he helped open his first ethanol plant, Agri-Energy LLC, in Luverne in 1998, Kolsrud has worked with 16 other ethanol plants around the country. “I’m on the board of several of them, so yeah, it’s a lot of traveling,” he said. “Every airport, every hotel, every taxi looks the same,” said the owner of DAK Renewable Energy. On June 17, Kolsrud received the 2008 High Octane Award from BBI International at the national Fuel Ethanol Workshop in Nashville, Tenn. The award recognizes his commitment to alternative energy. It comes with a $1,000 award, half of which Kolsrud plans to give to charity. He was nominated by Wisconsin Business Bank President Kevin Tenpas, said Andrea Parliament, who works at DAK Renewable Energy. The award is based on votes of people in the industry. “I contact people ... and let them know that they should vote for (Kolsrud) online,” Parliament said. Kolsrud is a 1966 graduate of Hills-Beaver Creek High School. He farmed in the area for many years. One day he decided he needed to change jobs. “Farming didn’t pay so much,” he said, “and I was always looking at outside ventures.” In 1995, he started working with a group of farmers in Luverne to raise money for an ethanol plant. After it opened, he worked with farmers around the country on similar projects. He continues that work from offices on the second floor of Splitrock Square. Six people work at DAK Renewable Energy, which is named for Kolsrud’s Initials. “Putting together projects that are locally owned by local investors takes a lot of time and a lot of education, and that’s what I’ve been doing for 12 years,” he said. His company’s latest project is Buffalo Ridge Energy near Sherman. It will produce ethanol as well as food products for the Asian market. “We’re trying to choose the best
technology right now,” Kolsrud said. “It’s a year away before we raise money for it. The the site has been selected, and the permits are in place.” He likes to raise as much money as possible from local investors. “There’s people doing some pretty miraculous things in this area,” he said. “What we take for granted (about ethanol and wind energy) is not understood on the East Coast,” he said. Bringing people here from other parts of the country is part of the education process. “When they see it, they love it and want to be part of it,” he said. And although he hobnobs with some of the rich and famous, he hasn’t moved far from his roots. He still farms on his Minnesota land, although his daughter and her husband live there now. Two years ago, Kolsrud and his wife, Char, moved north of Brandon. They like it here. “The environment in southeast South Dakota lends itself to entrepreneurs,” he said. Businesses enjoy tax breaks, investors are enthusiastic, and the people are good. His said he is humbled by the 2008 High Octane Award, which is given annually to the person who shows “passion and unstoppable pursuit in the ethanol industry.”
5 Steamboat Pilot and Today (CO) July 3, 2008
Salazar critical of Big Oil
Congressman says industry manipulating increasing gas prices By: Zach Fridell Steamboat Springs — Oil and gas companies are withholding production and largely to blame for rising gas and grocery prices, Congressman John Salazar said in Steamboat Springs on Wednesday. U.S. Rep. Salazar, a San Luis Valley Democrat, held a question-and-answer period with local policy-makers at 8 a.m. at Centennial Hall, then with Steamboat Pilot & Today editorial staff, as part of a sweep through Northwest Colorado. He said the oil and gas industry’s production does not match its capabilities. “Is the oil and gas industry manipulating prices? I would say so. My numbers show that production was at 80 percent during Memorial Day when it is usually around 96 percent this time of year,” he said. “They try to blame the ethanol production (for high grocery prices), but let me tell you, the reason the food prices are so high is because 50 percent of grocery prices at the store is based on transportation, and transportation is driven up directly by the price of fuel.” Regarding energy concerns, Salazar said he supported the “Use It or Lose It” bill, which would have required oil companies to drill within 10 years on land already leased or risk losing the lease. The bill failed to receive the two-thirds majority needed to pass the House of Representatives. “This bill sends a clear message to the oil and gas industry that they should develop what leases they already have available,” Salazar said. Oil companies have 68 million acres under leases across the nation, with trillions of barrels of oil that remain untapped, he said. Forcing them to use land already leased would spur competition and drop energy costs, he said. Salazar said oil companies have access to resources they are not developing, despite gas prices he said could reach $7 a gallon. “They’re not really pushing,” he said. “I don’t think it’s a shortage problem.” Education Responding to a question at Centennial Hall from Steamboat Springs School Board member Laura Anderson, regarding the direction of national education policy, Salazar
said he had heard concerns from across the state’s Third Congressional District about schools struggling with the No Child Left Behind structure. He said he was optimistic that fully funding the program would help bring the schools up to nationally mandated standards. “We need to put our money where our mouth is and provide for new engineers,” he said. Salazar also addressed the local concerns of Routt County and asked meeting attendees whether they are seeing large changes in the forests because of beetle kill. “Every time I’ve traveled through here and seen the forest changing, it’s bothered me more and more,” he said. Salazar was scheduled to visit a pellet processing and biomass plant in Walden later Wednesday. He also urged local leaders to be proactive about energy conservation. “I would encourage you local officials to stay on the forefront of this and make your community more sustainable,” he said. Routt County Commissioner Diane Mitsch Bush thanked Salazar, who is on the House Transportation and Infrastructure Committee, for providing funding for the region, including the Yampa Valley Regional Airport. Salazar also said he would like to create a high-speed rail line connecting Denver and the outlying ski towns such as Aspen, Vail and Steamboat Springs to facilitate daytrippers. This idea follows the Passenger Rail Investment & Improvement Act of 2008, which the transportation committee passed through the House earlier this month. That bill supported Amtrak expansion but did not mention Colorado. Salazar is a member of the Blue Dog Coalition, a 50-member group of conservative Democrats who work together to sway policy decisions. Salazar is up for re-election this year and faces a challenge from Republican Wayne Wolf, a seven-year Delta County commissioner and chairman of Colorado Counties, Inc.’s, Agriculture, Wildlife and Rural Affairs Committee. Colorado’s Third Con-gressional District includes 29 counties across the Western Slope and southern portions of the state.
6 The Houston Chronicle July 2, 2008
EPA considers requests on easing ethanol rules
Fuel rules burden corn production, House Republicans complain in letter Bloomberg News The Environmental Protection Agency said it's reviewing congressional requests to relax rules mandating the use of ethanol, which some lawmakers say is straining corn supplies. Fifty-one House Republicans signed a June 27 letter to EPA Administrator Stephen Johnson saying that reduced production of corn, the main source of U.S. biofuels, makes boosting the ethanol requirements a burden. Sen. Richard Lugar of Indiana also called for the elimination of a 54-cent-a-gallon tax on imported ethanol to ease corn demand. The EPA "will review the letter and respond appropriately," probably this month, said agency spokesman Jonathan Shradar in an e-mail. "Keep in mind this is from the same Congress" that just months ago passed requirements that 9 billion gallons of grainderived ethanol be blended into U.S. fuel this year. Under the 2005 Energy Policy Act, the EPA can grant a full or partial waiver if implementation is found to cause severe harm to the economy or environment of a state, region or the country. The agency must make a decision by July 23 on a request by Texas Gov. Rick Perry to waive 50 percent of the use requirement for this year. "Although supply will likely be decreased from years past," the demand for corn will dramatically increase, the lawmakers wrote in the letter. By reducing the mandate, "the administration can immediately impact the supply of corn that will be used for food and feed and lessen the severe economic harm facing millions of Americans." Corn, the source of almost all ethanol produced in the U.S., reached a record $7.9925 a bushel June 27 amid concerns that higher demand for grains for exports, animal feed and biofuels will tighten supplies. The Department of Agriculture said June 10 that supplies will be 10 percent smaller than last year's record crop. That report was released before the peak of rains that flooded numerous fields in Iowa, Missouri and other states in the Midwest.
7 KOCO 5 (OK) July 2, 2008
Gas Stations Reject Ethanol Blends
Pure Gasoline Better For Older Engines OKLAHOMA CITY -- Now that gas stations in Oklahoma are required to post the ethanol content of their gasoline, drivers can choose whether to use ethanol blended fuel. Chemistry professor John Nail said even a small amount of ethanol decreases gas mileage and can damage the engine in cars that are not designed for it. "[Ethanol] will damage part of the seals and some of the materials in the engine," he said. Gas station retailer Neal Do said he does not sell gasoline ethanol blend, only pure gasoline. "Selling ethanol blended fuel, it decreases fuel mileage. It's corrosive, and it's not good for your vehicles," he said. "We wanted to do the right thing and set up the trend to convince our fellow retailers to do what is right and what is best for the consumers."
8 Des Moines Register July 3, 2008
U.S. urged to import, not make, ethanol
By: Philip Brasher Washington, D.C. — The skyrocketing price of grain is bringing new pressure on American and European leaders to ease biofuel incentives, including the U.S. tariff on imported ethanol. The World Bank on Wednesday called for the United States and the European Union to roll back biofuel mandates, subsidies and tariffs as part of a 10-point plan to deal with soaring food costs in poor countries. The plan, which also proposes doubling agricultural aid, was prepared for the Group of Eight economic summit meeting next week in Japan. "We're starting to see a breakdown in international agricultural and food markets," the bank's president, Robert Zoellick, said in an appearance at a Washington think tank. Meanwhile, a coalition of livestock producers and food companies called on President Bush to lift the 54-cent-a-gallon tariff on imported ethanol. The new farm bill extended the tariff through 2010. The organizations said that increasing imports of ethanol would hold down the price of grain for animal feed and food ingredients. The groups include the National Pork Producers Council, the American Bakers Association, dairy giant Dean Foods Co., meatpacker Tyson Foods, Coca-Cola Co. and PepsiCo Inc. The Iowa Turkey Federation also is among the 35 groups that endorsed the proposal. Removing the tariff on ethanol imports "will alleviate a portion of the unnecessary feed and food price inflationary pressures that are adversely affecting our economic wellbeing and American consumers," the groups wrote. The Brazilian ethanol industry is launching a small advertising campaign this weekend in Florida and California to generate public interest in repealing the tariff. Brazilian ethanol, which is distilled from sugar, cost about 90 cents a gallon to produce in 2007, compared with $1.70 for corn-based ethanol, according to the World Bank. Phasing out biofuel subsidies and reducing tariffs "would allow biofuels to be produced from the most efficient feedstock by the lowest-cost producers, removing pressure from food prices," the bank said.
A spokesman for Bush, Scott Stanzel, said the White House is "always reviewing policies to best address the needs of the country." Grain prices have more than doubled since January 2006, and most of that increase has come since the first of this year. This spring's Midwest flooding, which is expected to reduce the corn harvest by nearly 1.8 million acres, will further tighten supplies. On Wednesday, the price of corn for December delivery rose 28 cents to top $7.80 a bushel on the Chicago Board of Trade. Matt Hartwig, a spokesman for the Renewable Fuels Association, said ending the ethanol tariff would do "nothing to bring down the price of corn, food or gasoline," and that the proposal to Bush was part of an "anti-ethanol smear campaign." Economists at Iowa State University have said that all of the government's incentives for ethanol would have to be removed to have a significant impact on grain and food prices. Those measures include a 51-cent-per-gallon tax credit for ethanol and a mandate that refiners use 9 billion gallons of ethanol this year. The administration is considering a request to cut that mandate in half.
9 WJAC 6 (PA) July 2, 2008
Clearfield County Officials Stand By Ethanol
CLEARFIELD, Pa. -- The use of ethanol as fuel has come under fire from some politicians. Just last week, Texas Governor Rick Perry said federal ethanol programs are to blame for rising corn prices. In Clearfield County, two ethanol plants are under construction in Lawrence Township and Curwensville. County officials said they're not concerned about the current backlash against ethanol. "People need to understand that we need to move toward these alternative sources of energy," said Commissioner Mark McCracken. According to McCracken, these ethanol plants will originally use corn but will eventually branch out to include other sources of ethanol, such as wood chips. Construction on both plants should be completed within the next few years. McCracken said Clearfield County is also supporting alternative uses of coal such as a new waste-coal plant near Karthaus.
10 St. Louis Post-Dispatch July 2, 2008
Study calls ethanol mandate a billion-dollar mistake
By: David Nicklaus Sarah Steelman’s about-face on ethanol makes this a good time to look at the costs and benefits of the E-10 mandate that Missouuri enacted in 2006. As it happens, both the Missouri Corn Merchandising Council and the Show-Me Institute have studied the issue recently. Predictably, the corn folks say the mandate has benefited Missourians — to the tune of $285 million this year and more than $2 billion over a decade. Show-Me’s Justin Hauke and David Stokes, however, say those figures omit some very large negatives. Specifically, they say the corn promoters are leaving out the cost to taxpayers, and they’re ignoring the fact that ethanol has a lower energy content than gasoline. Their bottom line is much different: We find that accounting for these costs significantly impacts the MCMC savings projections and would result in a net loss to Missouri consumers of almost $1 billion during the next decade. If one were to consider the additional impact of the E-10 mandate on higher food prices and CO2 gas emissions, these costs would be even higher. The ethanol mandates, they conclude, are merely another form of special-interest legislation: Missouri should adopt energy policies that benefit all Missorians, not just those who happen to be on the winning end of a corporate subsidy.
11 Indiana News Center July 2, 2008
E-85 vs. Octane
By: Eric Clabaugh E-85 gas is slowly helping America cut back on it's oil use while also helping support U.S. agriculture. The heavily promoted alcohol fuel even helps cut back on greenhouse emissions. But for consumers is it really worth it? Even though the price of e-85 gasoline is a little cheaper than regular octane fuel, when you break down the numbers it may not actually be worth the few cents saved for every gallon of gas. E-85 is about 74-percent as efficient as it's counterpart, octane fuel and per gallon. E-85 is around 70 cents cheaper. But if you have two vehicles that are the exact same, one is running on E-85, the other octane. To fill up a 15 gallon tank it will cost $49.50 at $3.30 a gallon for ethanol and $60 at $4 a gallon for octane. Now if those two vehicles were to take off on a trip of 300 miles with 15 gallons of gas in the tank the vehicle running on E-85 will need an extra five gallons of gas to make the trip. When you total things up. 15 gallons of octane fuel at $4 a gallon at 20 miles per gallon the final price tag is $60. But for E-85, even though the price is around $.70 cheaper per gallon the total cost is $66 because that vehicle needed an extra five gallons of gas to complete the 300 mile trip.
12 The Belmont Citizen-Herald (MA) July 2, 2008
Citing food prices, new coalition forms to kill biofuel mandate
By: Kyle Cheney Belmont, Mass. Harnessing reports that corn-based fuels are driving up food prices, a coalition of retailers, environmentalists and hunger organizations are mounting a campaign to undercut Congressional mandates to produce billions of gallons worth of such fuels. Backed by Congressman James McGovern, the Food Before Fuel Campaign argues that corn grown to produce ethanol has become more common on land that’s traditionally been used to grow food crops, sending prices for corn, soy and other farm products soaring. The spike in cost has strained American consumers and has led to violent upheaval in other countries, they say. Organizations such as the Greater Boston Food Bank, the Retailers Association of Massachusetts, the Massachusetts Food Association, the Massachusetts Restaurant Association and the New England Small Farm Institute say they hope to end subsidies for food-based fuel, stop food inflation and highlight the strains on retail and restaurants groups who are passing higher costs on to consumers. The launch of the effort occurred outside the State House and comes as the Legislature prepares to continue debate a bill to promote the use of certain biofuels as an alternative energy source, eliminating the gas tax on such fuels and creating incentives for production. “Food should be used primarily to fill people’s bellies, not their gas tanks,” McGovern said at the rally. McGovern said Congressional mandates, passed in the Energy Independence and Security Act of 2007, require the production of tens of billions of gallons of food-based ethanol over the next few years. McGovern, who chairs the Congressional Hunger Center, has advocated instead for “advanced biofuels,” those made from waste products, wood chips, switchgrass and other non-food products. These fuels, also known as “second-generation” or “cellulosic” biofuels, are the sole focus of the Massachusetts legislation.
Although technology hasn’t advanced to the point at which second-generation biofuel may be utilized on a large scale, McGovern said Massachusetts should look to its strong academic community to help advance the science. Underscoring the thicket of intersecting interests lawmakers must navigate, environmentalists raised immediate concerns about the nuances of second-generation biofuels, and biofuels advocates ripped the coalition for ulterior motives. Brooke Coleman of New Fuels Alliance blasted the coalition as a façade for protecting corporate profits. Despite the problems with food-based biofuels, Coleman said their existence had kept gas prices down between 15 and 25 percent, about $500 annually for the average American consumer. Although food prices might be lowered with the elimination of corn-based ethanol, Coleman said, the average consumer savings on food $15 or $20 a year, which would be offset by a steep rise in gas costs. Andrew Schuyler, director of Boston-based Northeast Biofuels Collaborative, said spikes in food prices were largely attributable to competition from China, drought and mismanaged trade policies, not biofuels. “Big Oil and their minions in the factory farm and grocery industries are threatened by biofuels because of what they represent—fuel diversification and fair prices to local farmers,” Schuyler said in a statement. “What seems to be missed is that the federal energy bill devotes more than 60 percent of the renewable fuel standard to advanced biofuels and the Massachusetts biofuels bill is 100 percent dedicated to advanced biofuels. One has to wonder why [coalition member Grocery Manufacturers Association] and others show up in Massachusetts opposing policies that lower gasoline [prices], clean the air and promote economic development.” Although not a member of the coalition, Jonathan Lewis, climate policy coordinator for the Clean Air Task Force, joined McGovern and warned that even advanced biofuels have pitfalls if they take up farmland that would otherwise be used to grow food. As demand for farmable land to grow fuel crops increases, deforestation increases as well. Removing trees, which can absorb carbon from the air, exacerbates emission pollution, Lewis said. “All cellulosic biofuels aren’t created equal,” he said, noting that data has shown that switchgrass ethanol, while better for the environment than corn ethanol, is still worse for air quality than gasoline, when deforestation is considered. Lewis suggested that crops be grown in greenhouses, on highway medians or in other areas that don’t require additional deforestation.
13 E & E News July 2, 2008
ETHANOL: Key senator urges tariff overhaul as Brazil eyes U.S. market
By: Allison Winter Lawmakers opposed to the import tax on foreign ethanol today gained a powerful new ally from the Corn Belt as Sen. Richard Lugar (R-Ind.) called for the elimination of the U.S. tariff on foreign ethanol as part of a larger platform of food and fuel policies. Luger's comments at the American Enterprise Institute are a significant departure for a lawmaker who has otherwise been very supportive of federal assistance for the domestic ethanol industry. "To demonstrate leadership," he said, "the United States should lift its tariff on Brazilian ethanol that now shelters the U.S. industry." The 54-cents-a-gallon tax on imported ethanol is gaining increased attention as policymakers struggle for an answer to rising food and fuel prices. Meanwhile, the Brazilian ethanol industry is launching its own campaign this week that attempts to endear its sugar-based fuel to U.S. consumers struggling with high gasoline prices. The "Are We There Yet?" ads, targeted to holiday-weekend travelers, say ethanol from sugarcane could reduce emissions and gasoline prices -- if Congress would eliminate trade barriers. Brazilian ethanol giant UNICA is funding the advertisements, which run this weekend in California, Florida and Washington, D.C. Most politicians have stood behind the tariff as a protection for U.S. biofuel against the cheaper Brazilian alternative. But a growing number of lawmakers have begun to question it, especially after the recent farm bill made the tariff higher than the U.S. blenders' subsidy. Sens. Dianne Feinstein (D-Calif.) and four other senators introduced legislation last month to scale back the tariff but not eliminate it. House lawmakers introduced a similar bill. The Republican governors of California and Florida, which could benefit from an increase in the amount of Brazilian ethanol entering their ports, have also favored reducing the tariff. "We want to try to get consumers to recognize that this is keeping them from obtaining lower prices for fuel, then perhaps we can start seeing change," said Joel Velasco, a UNICA spokesman.
With the tariff in place, the Brazilian industry waits for higher U.S. ethanol prices before it has an incentive to enter the market, Velasco said. Eliminating the tariff would help create more vigorous trade, according to UNICA. The United States imported about 113 million gallons of foreign ethanol in the first quarter of this year. Short-term domestic pain Lugar -- who has also supported unconventional platforms on farm policy reform -admits that opening the market to more Brazilian ethanol could cause some short-term strain for domestic producers looking to get into the market. "It would not be an encouraging moment, if the tariff were taken away," he told reporters. But Lugar said eliminating the tariff would provide more competition and a better biofuels market in the long term. "Brazil can provide ethanol to our coasts more efficiently than from our 15-state heartland," Lugar said. On the heels of Lugar's statement, 36 groups sent a letter to President Bush stating their support for reduction of the ethanol import tax. The signatories include food industry giants that have been critical of all ethanol support programs, including the American Bakers Association, the Snack Food Association and major livestock groups. Lugar is not yet joining their camp on the rest of the domestic ethanol support system. He said he still favors the renewable fuels standard and tax incentives for domestic producers. Texas Gov. Rick Perry (R) and others have called on U.S. EPA to scale back the mandate. "I wish they would get over it, but some people haven't," Lugar said.
14 Los Angeles Times July 3, 2008
Stop requiring ethanol production
With the price of corn soaring, it's clear that the ethanol mandate is bad economic policy and bad energy policy. You may be justifiably fuming about gasoline prices, but have you checked your grocery bills lately? Last week, corn briefly hit a record high -- and given its importance as a livestock feed, sweetener and packaged-food ingredient, that's putting upward pressure on prices for a wide range of comestibles. As a result, Congress is rethinking one of its more shortsighted energy policies. Successive energy bills have imposed ever-increasing mandates for blending ethanol (which in the United States is made mostly from corn) with motor fuels. Apparently, no one explained to Congress the basic economic reality that when you dramatically increase the demand for an agricultural product whose supply is limited by the amount of acreage available for farming, prices will rise. Ethanol mandates are far from the only cause of the run-up in corn prices, but there's little question that they play a role. Last week, 51 House Republicans sent a letter to the Environmental Protection Agency urging it to relax its requirements on ethanol use. This comes after Congress required that 9 billion gallons of ethanol be blended into U.S. fuel this year; in 2006, the U.S. produced less than 5 billion gallons. The EPA has the power to waive biofuel rules if they would severely harm the economy or environment. The ethanol mandate, which was passed with little study or consideration of its consequences, is hurting both. High prices for corn and other commodities are prompting landowners to remove fallow but ecologically important farmland from a federal conservation program and plant on it instead. That increases soil erosion and fertilizer use, contaminating U.S. waterways. Meanwhile, high food prices are boosting inflation. The EPA should waive the ethanol requirement, but if that's the only outcome of the ethanol brouhaha, the country will still lose. Lawmakers should see this as an important lesson: Tinkering with energy regulation can have disastrous consequences, especially when it's done on behalf of special interests rather than the national interest. Given the number of phenomenally bad proposals for lowering oil prices floating around the Capitol, this lesson could not come at a more critical time. Energy policy is complex and little understood by voters, which is why Republicans get away with claiming that more offshore drilling would lower prices even though government experts say it would have no effect for decades, while Democrats get away with proposing windfall profit taxes on oil companies even though economists say that would be self-defeating. With a little more study and a little less populist rhetoric,
Congress could pass energy laws that would both lower consumer costs and lessen our use of climate-altering fossil fuels.
15 The New Republic July 2, 2008
Just a Spoonful of Sugar...Ethanol
By: Suzy Khimm Ethanol, the much-maligned biofuel of the hour, is gaining some traction on the Hill. Today I attended a conference on the global food and energy crisis at the American Enterprise Institute, where Senator Richard Lugar argued (pdf link) that the United States should lift its existing 54-cent tariff on imported sugarcane ethanol from Brazil: There are striking examples in oil and natural gas, where increased political interference puts upward pressure on price…To demonstrate leadership, the United States should lift its tariff on Brazilian ethanol that now shelters the U.S. industry. Proponents of sugar ethanol say that the critics have it all wrong: not all biofuels are created equal, and sugar ethanol is far greener and cheaper than its corn-based pariah cousin. Sugar ethanol can produce over eight times the amount of energy expended in its production (versus a 2:1 ratio for corn ethanol production, or nearly nil, depending on whom you talk to), and it doesn’t divert crops from heavily relied-upon food stocks. The potential downsides? Reports of forced labor in Brazilian sugarcane fields and the alleged threat to the country’s ecosystem. All things being equal, even if we started importing cheaper sugar ethanol, it probably wouldn’t provide immediate relief for Americans at the gas pump. Sugarcane ethanol is a fuel additive that contributes only a few cents to the current price of American gas. Nevertheless, the U.S. could conceivably raise the amount of sugarcane ethanol in its fuel and make a more significant dent in gas prices. McCain, ever the free-tradist, joins Senators Lugar and Dianne Feinstein in supporting the removal of the sugar ethanol tariff. Obama--with his close ties to the corn ethanol industry--is an opponent, saying that relying on such energy sources would compromise America’s “energy independence.” But America is far from being liberated from foreign energy sources any time soon, and to exclude such options wholesale smacks of sheer protectionism. A more realistic objective would be to diversify America’s energy sources--not only by developing domestic energy sources and alternative fuel technologies, but also by cultivating foreign energy sources that are secure and sensible. For America, Brazil would be a fairly benign shoulder to lean on. The country doesn’t carry the same security risks as other energy-rich nations, linking us to autocratic regimes or explosive regional conflicts. And the ethanol issue might be a good opportunity for the U.S. to build closer ties to Latin America, one of the most neglected areas of the world under
the Bush administration. The human rights and land-use concerns certainly warrant further investigation, but sugar ethanol could ultimately prove to be a sweet deal.