Ethanol's Declining Political Clout
ALTOONA, Iowa (AP) — For decades, presidential candidates' chances in Iowa were wounded if not doomed unless they backed federal support for ethanol, a boon to the state's corn-growing economy.
That rule of politics collapsed resoundingly in the 2012 campaign when five of the six top Republican candidates said it was time for such intervention in the private market to end.
Now, Iowa's senior political leaders are pondering how to shore up political support for the corn-based fuel at a time when its economic and environmental benefits are under attack.
The latest blow came this month, when the Obama administration proposed cutting the required amount of ethanol in the nation's fuel supply for the first time since Congress established a standard in 2007.
The state's leading Republicans and Democrats hope they can still use Iowa's political importance as a swing-voting state and as the site of the first presidential nominating contest to get candidates to support keeping the requirement, or at least part of it, in place.
But the case has become a tough sell for Republicans as the party has moved to the right and become increasingly hostile to government programs and directives.
Even among Democrats, concern has grown about ethanol's role in rising food prices and in cultivation of land that had been used for conservation.
The recent boom in domestic oil production has also made ethanol less prized as a U.S.-produced fuel that limits dependence on foreign oil. The grain alcohol burns cleaner than gasoline but produces less energy.
"I think there are some that feel it's potentially safer now to be lukewarm at least, or not supportive of it," said Iowa's Secretary of Agriculture Bill Northey, a Republican. "I think it's yet to be seen if that's a smart political position."
U.S. Sen. Charles Grassley of Iowa said he hopes to thwart the administration's proposal in Congress if it survives the 60-day comment period.
Meanwhile, Republican Gov. Terry Branstad planned to press his fellow GOP governors, especially those with possible presidential aspirations, to be mindful of the ethanol industry's economic importance. He met with New Jersey Gov. Chris Christie at a governors' association meeting in Arizona this week. On Tuesday, Branstad launched a Website for people to leave comments for the EPA.
For politicians eying the White House, "Whoever comes here better understand the importance of renewable fuels, or they are going to have hell to pay in rural Iowa," Branstad said in a recent interview.
The federal government began actively supporting ethanol, which is made by fermenting and distilling corn, about 40 years ago when petroleum prices spiked and anti-air pollution efforts were ramping up. Refineries initially were given a tax credit to produce the grain alcohol and Congress later required oil companies to blend it in their gasoline.
In Iowa, the nation's leading corn producer, about 45 percent of its crop went into ethanol last year. The state has 42 ethanol plants that produced 3.8 billion gallons.
Branstad said cutting the federal requirement would lower corn prices that have already fallen this year because of an unexpectedly robust harvest.
"They're making a huge mistake," Branstad said at the governors conference this week. "And they're going to drive corn below the cost of production."
Democratic U.S. Rep. Dave Loebsack of Iowa City said a loss of federal support would be "a devastating decision for Iowa's farmers, rural communities and economy."
If the federal mandate was reduced or ended, ethanol producers would rely on the handful of states with their own ethanol fuel standards, and on exports which accounted for about 1 billion gallons last year. The proposed change would likely hurt smaller producers more than powerhouses like Archer Daniels Midland and Cargill.
Ethanol supporters insist the federal requirement is still justified even though the U.S. reliance on foreign oil is dropping, and for the first time in two decades, the U.S. produces more crude oil than it imports.
"We use 10-percent of ethanol in the gasoline in our cars. Do you want to import another 10 percent of oil" Grassley told the AP. "No, you don't."
While oil companies are pushing to escape the ethanol mandate, environmental groups are growing concerned about the impact of increased corn production. Farmers planted 15 million more acres of corn last year than a decade ago, according to an Associated Press analysis, taking land out of conservation use and applying more pesticides and herbicides.
Years ago, "there was a strong argument for encouraging the use of available resources like corn, for ethanol. Those days have passed," Democratic Sen. Patrick Leahy of Vermont said in a statement.
In a sign of ethanol's eroding political support, the winner of the 2012 Iowa caucuses, Rick Santorum, called during his campaign for phasing out the federal mandate.
The prospects for support in the possible 2016 presidential field are uncertain. About a week ago, Branstad brought up ethanol support privately with 2012 vice presidential nominee Paul Ryan before the Wisconsin representative headlined a Branstad campaign fundraiser.
Ryan declined to comment publicly on the EPA's ethanol proposal. A spokeswoman for Christie also declined to comment on Christie's position. Among possible Democratic candidates, neither Clinton nor Vice President Joe Biden has commented publicly about the issue recently.
Some question whether the economic impact on Iowa would be as dire as its political leaders suggest.
Only about 2,000 people work full time in the industry nationwide, said Iowa State University economist Dave Swenson, adding, "Worldwide demand for corn is still very strong."