Last week, the state of Florida proposed new ethanol blending rules that would open the door to the nation's third-largest gasoline market.
Despite the Sunshine State's dominant role in sugar production, South Dakota-based POET, expects to supply the Florida market from five biorefineries it's building in Ohio and Indiana.
While Florida's move has been in the works for months, it's doubtful the new guidelines would have been published without last week's 500 percent increase in renewable fuel standards.
On the campaign trail though, ethanol typically takes a back seat to other "more pressing" matters. But as Andrew Batt discovered, for all the debate over foreign wars, health care, and immigration policy…one issue dominates the rhetoric of presidential hopefuls in the final days before the Iowa Caucuses.
The role of rural America in the nation's Presidential nominating process is nothing new. In 1976, a little-known peanut farmer from Georgia won the Iowa Caucus and later the Presidency. More than twenty years later, the top Democratic and Republican candidates still embraced agriculture and ethanol.
Vice President Al Gore: "…and we need to support ethanol."
President George W. Bush: "…I've just come from a big farm bureau convention where I shook a lot of hands and I'm focused on your caucuses."
The stature of renewable fuel in Iowa is unmatched anywhere else in America. But the nation's leading state for both corn and ethanol production evokes controversy with its status as a political stepping stone.
Jerry Taylor, Senior Fellow – CATO Institute: "…it's a presidential talking point because the first vote for president will be in Iowa. There's a lot of farmers there. They're all very interested in ethanol. It's an important issue for farmers because ethanol and ethanol subsidies in the Federal Ethanol Program is a way of making farmers richer."
Jerry Taylor, a Senior Fellow from the Washington-based think-tank CATO Institute, is a top critic of ethanol policy – especially during the Iowa caucuses.
Jerry Taylor, Senior Fellow – CATO Institute: "It's about saving middle America, the Heartland, and the family farm and making the economic life of farmers a little bit easier than it might otherwise have been. That's the core of the appeal. But it's a sham… It's going to make climate change worse not better...Takes more irrigation, more fertilizer, and that makes the global warming picture very bad for ethanol… It might reduce oil prices by about three tenths of one percent."
Taylor's criticism is not isolated. Some major newspaper editorials have slammed candidates for voting against ethanol on Capitol Hill and quickly "pandering" to farmers in Iowa as they run for President. Even Hollywood has taken a shot at the Iowa Caucuses…
(Clips from "The West Wing")
Arnold Vinick (Alan Alda): "Farmers in America don't want to be paid in the mailbox, they want to get paid in the marketplace. People know where I stand…they may not like it but they know I'll stick with it."
Assistant: "This is issue one, two, and three here."
Arnold Vinick (Alan Alda): "I'm not a panderer."
Assistant: "It's unavoidable. It's a non-panderous pander. General Patton would have pandered on ethanol."
The NBC drama, "The West Wing" characterized ethanol as the ultimate political pander.
Josh Lyman: "You walk out on that stage and come out against ethanol you are dead meat."
The award-winning series profiled hypothetical candidates struggling to endorse ethanol shortly before the Iowa Caucuses.
Ultimately, one candidate played by actor Jimmy Smitts endorses ethanol despite his own misgivings…
Matthew Santos (Jimmy Smits): "Ethanol is good for our economy…"
…While another candidate, played by actor Alan Alda rejects the so-called "ethanol pledge."
Arnold Vinick (Alan Alda): "Now I know that the ethanol subsidies have been good for some of you but mostly it's a windfall for huge conglomerates. I'm embarrassed by it and you should too."
But Hollywood's characterization of an ethanol oath is widely disputed in Iowa.
Monte Shaw, Exec. Director Iowa RFA: "I think it's more of an education process than pandering. Iowans are too smart, we're not single issue voters."
Monte Shaw, Executive Director of the Iowa Renewable Fuels Association, says Iowans benefit from the caucuses but adds the real economic profit is from ethanol.
Monte Shaw: "They come to all of Iowa's 99 counties and they go into a lot of small towns where there is an ethanol plant or a biodiesel plant and they see a new truck stop and they see a new diner and they see a new house being built. They see that these things are good for the environment, good for energy independence but they've absolutely transformed rural America."
So how do the candidates of 2008 actually stand on ethanol? The top five Democratic contenders all support an aggressive renewable fuels mandate and the current ethanol import tariff.
But some critics have blasted Sen. Hillary Clinton for waffling on ethanol. Clinton voted against a 2005 energy bill due to concerns that ethanol production would replace the gasoline additive MTBE and raise gas prices for her constituents. She now supports ethanol as a nationwide solution for energy independence.
The top two Republican contenders in Iowa, Mitt Romney and Mike Huckabee, both support a renewable fuels mandate and an ethanol import tariff. Rudy Guiliani supports tax subsidies for ethanol but has yet to publish his position on mandates.
Other Republicans like Fred Thompson, Ron Paul, and John McCain are critical of government intervention. Instead of mandates, these candidates have called for a free market in alternative energy.
Sen. John McCain, R-Arizona: "I trust Americans, I trust the markets, and I oppose subsidies."
Senator John McCain's position on ethanol arguably is the most controversial of any candidate. In 2000, McCain blasted ethanol subsides…
Sen. John McCain, R-Arizona: "We don't need the subsidies and if it wasn't for Iowa being the first caucus state no one on this stage would support ethanol."
President George W. Bush: "I support ethanol, I completely support ethanol, John. And I'd support it whether or not Iowa was first."
…in 2008, McCain's views have slightly changed. He still opposes subsidies for both ethanol AND oil but supports the import tariff. McCain has yet to reach one of the top three positions in recent Iowa polls and according to Jerry Taylor, you can partially blame his views on ethanol.
Jerry Taylor, Senior Fellow – CATO Institute: "I think that even if John McCain now promised to sacrifice every child in the United States to the corn god it wouldn't help very much in the Iowa Caucuses."
George W. Bush: "This is a good bill and I'm happy to sign it…."
Despite the opinions of newspaper editorials and Hollywood scriptwriters, ethanol is still embraced by a wide number of lawmakers in Iowa and in Washington. Last week's energy bill included an aggressive provision for 36 billion gallons of biofuel by 2022.
Monte Shaw: "Think of all the people that don't represent the Midwest that voted for this renewable fuel standard and some of them actually aren't running for President of the United States."
For Market to Market, I'm Andrew Batt.