Corn Crop, Cain and Ethanol

In 2005, ethanol plants consumed 14 percent of the nation's corn crop. Producing seven times as much fuel, under Bush's proposed mandate, would put the proportion close to 100 percent.

In 2000, Arizona Senator John McCain learned about Big Corn’s power the hard way. He said the ethanol industry wouldn’t exist without Congress’s meddling. He said that ethanol subsidies were a giveaway to companies like ADM.

That won him no friends in Iowa, the nation’s largest corn pro­ducer, which happens to host the first key caucus of each presidential election cycle. McCain decided to duck the Iowa caucuses in 2000.

By August 2006, with an eye on the White House once more, McCain had changed his tune. While still skeptical about subsidies, he told an audience in Grinnell, Iowa, “I support ethanol, and I think it is a vital alternative energy source.”

Thanks to its political heft, Big Corn is even more powerful than other parts of the farm lobby. Not all farmers benefit from ethanol subsidies; farm­ers who buy feed corn for cattle, for example, suffer from higher costs when corn prices rise.

So do peo­ple who eat corn. In Mexico, the price of tortillas has doubled over the past year as the ethanol boom has bid up the cost of this commodity. The country’s poorest citizens have taken to the streets to protest the increases. Here’s an ethical question: in a world where people starve, does it make sense to run cars on food?

Ethanol fans don’t worry about this question too much, however, because they don’t see ethanol’s competitors - oil and gas - as having a claim to the moral high ground.

Nor do they see the oil and gas industries as champions of the free market. Dennis Langley, former CEO of Kansas Pipeline Co., a transporter of natural gas, began his career doing construction projects as a teenager, eventually acquiring $2 billion in energy assets.

He recently helped start E3 Biofuels. “I came out of that indus­try,” he says of oil and gas. “It is clearly the most subsidized industry in the U.S.” Perhaps. But there’s little doubt that, for its small size, ethanol gets an enormous amount of government help, too.

Helge: Ethanol from food is a controversial issue. The same discussion is moving over to Finland. We already have our own Altea Oyj Koskenkorva case. The biggest crop based plant was curtailed a month ago. But the cellulosic ethanol plans are proceeding according to plan. Big companies and powers are backing the cellulosic agenda.

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