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Has Obama dropped support for ethanol?
October 1, 2008
by Bobby Fontaine

The presidential debate between Barack Obama and John McCain came close to kicking off a national dialogue about what’s wrong with the world’s economy and especially here in the US. Even today in the Bush’s weekly Saturday radio address and on Thursday when he interrupted our evening television shows to prop up his bailout of Wall Street, he still never cut to the core of what’s wrong with the economy. I still don’t think most people get it.

The reason payments on loans aren’t being made leading to banks and investment firms collapsing is because the price of everything we need to survive is rising to such extreme levels that those who live close to the edge of their means are going bankrupt. So no matter how much money we throw at getting those bills paid, if the source of the problem that started with the skyrocketing  price of crude oil which is making the cost of everything else go up isn’t solved, then nothing we do will stop the economy from collapsing. They can bail out the people hurting now but they will still be pain after they do it and so will everyone else if they don’t fix the energy equation.

Obama almost brought up his thoughts on the alternative energy issues he supports only he didn’t say saying anything about ethanol. In August of last year Obama said "(Ethanol) ultimately helps our national security, because right now we're sending billions of dollars to some of the most hostile nations on earth." Ethanol is one of the key issues him and McCain are at deeps odds over. McCain has always been opposed to it because he doesn’t like federal mandates forcing it on the market or federal subsidies of 51 cents a gallon for gasoline sellers who blend it with gasoline. Instead he wants the free market to chose which alternative fuels we use.
After Obama appeared to signal he was stepping away from ethanol by not mentioning it as one of the alternative renewable energies he supports, McCain came in defensively declaring he wanted to get rid of ethanol subsidies even though the topic of ethanol hadn’t come up. In fact the way he stumbled into it and then dropped it quickly again makes me wonder if he thought Obama was opening the door to debating their stances on ethanol but then he realized it hadn’t come up yet.

McCain responded to Obama’s list of energy sources that ended with biodiesel instead of biofuels adding “The point -- the point is -- the point is, we need to examine every agency of government.First of all, by the way, I'd eliminate ethanol subsidies. I oppose ethanol subsidies. I think that we have to return -- particularly in defense spending, which is the largest part of our appropriations -- we have to do away with cost-plus contracts.”

Or course it’s understandable McCain to make that mistake because Obama has always supported ethanol strongly with his being from Illinois which is a big corn growing ethanol producing state. Considering how much our economic crisis is driven by unrealistically high-energy cost, it's a wonder ethanol isn't the center of focus of the national dialog about how to fix our failing economy. In fact I thought for sure Obama meant to say biofuels when he spoke in favor of biodiesel. But later near the end of the debate when it was too late to renew dialogue on energy, he broke away from the topic of foreign policy it seemed gratuitously listing the energy issues he supports a second time which again also included biodiesel but not ethanol.

He put it out there like this saying “What we're going to have to do is to approach it through alternative energy, like solar, and wind, and biodiesel, and, yes, nuclear energy, clean-coal technology” again clearly leaving out ethanol as an alternative energy source.

Then he goes on to say “Over 26 years, Senator McCain voted 23 times against alternative energy, like solar, and wind, and biodiesel.” John McCain also voted against ethanol subsidies and mandates which in the most contentious energy issue between the two of them but Obama never touched on it.

I think Obama was sending a two fold message with his lack of ongoing support for ethanol, one that he no longer supports ethanol and the other that he doesn’t want to discuss it. He could be threatening the millions of Midwesterners who depend on ethanol  for their booming economy driven by corn sales to ethanol producers that he may drop his backing of ethanol if they don’t start to getting behind him hired numbers in this presidential race.

It seems that even though McCain is against their new corn gold rush being driven by politically inspired legislation supporting ethanol rather than it competing its way to the top of the fuel chain while Obama supports them, they’re still largely unwilling to vote for a Black man for president. I mean why should Obama support ethanol in spite of its many shortcomings if the Corn Belt is going to vote for McCain even though he is against ethanol just because he is white. When Obama moves away from ethanol, so will Democrats which means an end to ethanol subsidies and mandates.

The economy started heading south with no sign of returning when ethanol began to be added to gasoline. The dollar started to decline when Enron failed in 2001, about the time the war on terror began. In 2005, after and energy bill was passed that was supposed to be good for the economy, the value of the dollar started to go back up again. But as soon as the ethanol mandated in the energy bill went into actual use, the dollar started to slip again which caused the price of crude oil to go up because the uncertainly of the dollar with investors in the international business community started looking towards the Euro as a more stable standard to trade in than the dollar which means we have to pay more for crude oil.

But the Euro was only increasing in value because the dollar was failing, not because they were providing a stronger base for trade. So now unrealistic dependence on the Euro is causing the whole world’s economy problems because the strength everyone is used to coming from the US economy is gone.

A lot of blame has been cast on speculators for pushing up the cost of crude oil and rightly so. But that is only part of the equation. They are only trying to hedge against the declining dollar. So when the dollar weakens, it takes more dollars to buy a barrel of oil while at the same time speculators are trying to preserved the value of their currency by investing in oil futures contracts so they will make more dollars to make up for the loss in value to the ones they already have.

So really we have to look at what’s hurting the value of our currency. Of course lacking confidence in the dollar and Wall Street is partly to blame. But after the energy bill passed in 2005, both started to go back up again. Then it dropped again causing the price of gasoline inevitably to rise to over 4 dollars a gallon which was the beginning of the end of the already weakened and crumbling world financial system.

So the question is why did this happen before we address how to fix it.  

Ethanol started to be added to gasoline in May of 2006 when the dollar started the second phase of its ruin. This should have been a time of financial celebration because ethanol was going to rescue us from foreign oil dependency where we started to keep money we  pay for gasoline from leaving our shores while putting it in the hands of farmers instead of the oil companies. But a little know secret about ethanol is that it causes a 3 percent loss in mileage when added to gasoline at 10 percent. At least that is what the EPA and energy department claim. But complaints about it from motorists put the percentage of mileage loss much higher. It is even being admitting by some states that it cause between a 3 and 5 percent loss when they’re faced with complaints about it causing between 10 and 30 percent losses.

So an ethanol fuel program that was supposed to relieve us from sending billions of dollars overseas, a program we sacrificed a third of our national grain supply to produce, turned out to actually be costing us gasoline mileage. At the same time, it’s forced the price of the corn it’s made from to go through the roof straining ours and the world’s food markets with excessively high prices. After ethanol use started, it looks like we took a sledge hammer to the dollar and our economy. But still the issue is too sensitive to be tabled publicly by our leaders that no one in Washington can honestly address it. So they’re trying to patchwork the economy back together while going around the root of the problem because there’s nothing else they can do other than fix the ethanol equation which would mean admitting they got it wrong in the first place.  

I talked to Matt Hartwig, the head of public relations for of the Renewable Fuels Association yesterday. They’re the largest lobbying firm for ethanol in Washington DC outside of Archers Daniels Midland. But really both of them are one in the same. Hartwig is the guy who put together the recent wave of ethanol campaign adds on TV that make it look like it is the cure-all for all our energy problems. Actually I wasn’t allowed to speak directly to him.

His secretary acted as a proxy to precipitate the interview while I waited on hold in-between questions. He was afraid to speak directly to me on the issue so his secretary pretend he wasn’t there while she explained to me the reason anhydrous ethanol is added to gasoline instead of hydrous ethanol is because hydrous ethanol has water in it and won’t blend with gasoline. He was obviously not aware of new technology that allows hydrous ethanol to be added to gasoline. It’s being experimented on by the state of Louisiana under new laws passed a few months ago and also in Europe. In fact China is already doing it. He didn’t return my call after I left him a message on his voice mail explaining there is actually a way to do it.

It seems the ethanol industry might want to consider changing who represents them in Washington. It seems the Renewable Fuels Association actually wants to sabotage ethanol’s future. This is because the laws that mandate and subsidize ethanol are written around anhydrous ethanol which is where they obviously make their money. It all traces back to a dysfunction oxygenate program the EPA used to have that required ethanol to be used for air quality. Oxygenates have since been proven to actually worsen air quality. Rather than having a democratic ethanol debate before it began to be used as a fuel replacement, Bush used existing laws to add it to gasoline without thinking it through.

My advice

It would be wise for ethanol supporters to get the American people talking about hydrous ethanol before Obama explains why he didn’t mention ethanol in the debate. His dropping support for it could deliver ethanol a knock out punch putting an end to the industry altogether. If the American people start talking seriously about the problems anhydrous ethanol really causes without knowing anything about hydrous ethanol, they may never want to hear the word ethanol again. But if the next thing they hear about ethanol is about a way to make it work better rather than a debate about how bad it is now, both candidates will have to get behind it. Then Midwesterners can vote for whoever they want no matter what color skin he has and not worry about ethanol’s future.

Personally I believe Obama has the kind of vision we need in Washington even though he is in favor of big government. But big spending ideas are part an attitude he can amend once he takes office after he finds better ways to fix the problems he wants to solve, like fixing our energy and economic problems by simply raising more hydrous ethanol awareness.

Hydrous ethanol is cheaper and safer to produce and transport. It can be used as pure 100 percent hydrous ethanol in high compression ratio engines or in ignition systems that have been converted to be able to have flex-fuel capabilities. This can be done without causing mileage losses or emission problem. The same is true for adding it to gasoline but no conversion is needed on engines for the hydrous ethanol/gasoline blend to work properly. And it can be moved through pipelines from refineries without any problems.

Since anhydrous ethanol is nothing more than hydrous ethanol distilled two more times to get all the water out, not only does hydrous ethanol mean skipping this expensive and energy intensive refining process, the outcome is more ethanol because the water stays in the fuel. This means more mileage and more fuel for the same amounts of corn we invest in producing ethanol now with less cost or waste of energy. So the balance of pressure we’re putting on the value of the dollar now with anhydrous ethanol will immediately begin to level off if we head in this direction while also actually providing relief from our dependence on foreign oil.

Since hydrous ethanol is simpler and safer to produce and use, it doesn’t need huge investments in building refineries to produce it while it can be produced from many other feedstock’s other than corn making it feasible for Americans who want to be totally energy independent to make it at their own homes or produced regionally for local or municipal consumption rather than trucking it around the country from the Midwest.  

This would however threaten the oil industry’s future gasoline sales while forcing the price of crude oil further down because we would need less of. This makes me wonder if the people who spend ethanol’s profits in Washington lobbying for anhydrous ethanol while pretending to be ignorant of the more positive and profitable aspects of hydrous ethanol are purposely setting the Midwest up for a big ethanol downfall. If ethanol crashes and oil prices drop, we will be right back where we started even though hydrous ethanol can compete with cheap oil.  

If either of the candidates raise the issue of hydrous ethanol before election day, they will launch themselves into an extremely powerful position while the other will look the same way Matt Hartwig does, like he’s ignorant of how important the issue is to the future of this country, farmers, the ethanol industry itself, and our energy needs. Hydrous ethanol offers relief from all the problem areas that threaten ethanol’s future now while benefiting its fuel and profit potential making it hard to ever make arguments against it in the future.

Ethanol is the issue that ought to be at the center of our electoral process when it comes to our energy problems and economic needs. Right now the reason it deserves so much attention is because of the mistakes being made using it which lends to a call for its use to come to an immediate end. But if the issue of “ethanol” changed towards representing the old anhydrous ethanol that evolved to the new much better hydrous ethanol before anhydrous ethanol becomes such a problematic fuel that no one ever wants anything to do with it again, then we should be able to put a lot of the problems with it behind us as growing phases in the maturing of our renewable energy future. But if the meaning of the word doesn’t change, what we are doing now could lead to our downfall if we can’t get relief from high fuel costs and the weakening economy.  

I found that the presidential debate lacked vision from both candidate. It was a good debate. I‘ll give them both credit for that. If the world wasn’t perched at the edge of an economic disaster like nothing we’ve ever dreamed of before, I would have thought we had a good race getting under way for the upcoming election. They both talked about the issues as if there were no obstacles to them having four years to try to make their dreams for the future of the United States come true. But I didn’t hear any plans for how to get us back to that place where American dreams can come true when the truth is we may not have a country come the 20th of January 20 of next year. And they clearly ducked the ethanol issue which is at the core of what’s wrong with the country while it could be what’s altogether right about where we are heading now.

So I’m hung up and confused about where we are being taken. To tell you the truth, I don’t think anyone in Washington is leading anymore but rather hoping we will fix the ethanol equation on our own because for them to admit there is a way to fix it is an admission it doesn’t work now. This is totally unacceptable. Someone needs to come down off the fence and start an honest debate about ethanol so we can fix this. If they don’t, this country will do more than scrape the bottom of the economic barrel of ethanol and crude oil.

They have been saying we almost lost our nation last week. But they talk about the future like they’re going to take the next four years to fix everything. We need leadership that has guts and integrity unlike any the candidates running for office anywhere in the country appear to have. That obviously needs to change now. They need to do it themselves or we need to do it for them by any means possible, the most simple of which is to spread the word about hydrous ethanol.    

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News and Views with Bobby Fontaine - http://bobbyfontaine.blogspot.com/
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Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved.





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