Iowa Public Television


Ethanol Leaders Unite

posted on November 14, 2008

Hello, I'm Mark Pearson. Hampered by the worst financial crisis in more than 70 years, U.S. consumers tightened their belts in October at an unprecedented rate.

According to the Commerce Department, retail sales fell by a record 2.8 percent in October, surpassing the previous low water mark which occurred in the wake of the terrorist attacks of 2001.

The drop in sales was led by a 5.5 percent decline in auto sales, but all types of products from furniture to clothing fell as consumers retrenched.

Excluding autos, retail sales fell by 2.2 percent, also a record decline.

Elsewhere, in what normally would be interpreted as a positive economic indicator, the U. S. trade deficit fell more than 4 percent in September reflecting lower oil prices and weaker demand for imports.

And The Labor Department reported new claims for unemployment shot up by 32,000 last week to the highest level in seven years.

The reports revealed, once again, that U.S. businesses – and the consumers who support them -- are feeling the effect of the economic downturn. Ethanol producers are no exception, but increasingly, the industry faces challenges from other sectors of the economy.

This week, ethanol proponents "circled the wagons" to respond to what they claim is unjustified criticism from America's grocers.

Ethanol Leaders Unite Citing a need to have smart policy reform and proactive grassroots promotion, six of the major independent ethanol producers have banded together to fight misperceptions about the corn-based fuel. Coming together under the title Growth Energy, producers like POET Energy and Hawkeye Renewables are taking a stand against ethanol detractors.

Growth Energy's first call to arms is against the assertion by the Grocery Manufacturers Association that high food costs are linked to high corn costs associated with increased demand for ethanol. Members are saying the Grocery Manufacturers' argument is a false one pointing directly to the fact that corn prices are now lower yet food prices have continued to rise. As further evidence against the G-M-A's argument, the group cites a Purdue study that estimated increasing energy costs were responsible for 75 percent of the recent run-up of corn prices.

Growth Energy is planning to pursue other issues as well. In light of high production and reduced demand the advocacy group is planning to find ways to increase consumption. As part of its next campaign, the group's officials say they will push the Environmental Protection Agency to raise the blend rate from the current E-10 -- a blend of 10 percent ethanol and 90 percent gasoline -- to E-15 or even E-20. One of the stumbling blocks has been the potential wear and tear on car engines. Preliminary work by the EPA indicates an increase to E-12 would be possible but higher percentages remain to be studied.

Work by the group is already being applauded by other ethanol industry advocate groups like the Iowa Renewable Fuels Association.

Monte Shaw, Iowa Renewable Fuels Association: "...and we've gotta push back because the truth is on our side. Unfortunately, all too often the budgets are on the other side with major food companies or big oil companies. You know if you wanna blame us for helping raise the price of corn from $1.80 to $3.80, okay. Hey, we probably had a lot to do with that. We did not run the price of corn up to 8 bucks. That was speculation. It went up, the buble burst, its come down. And they have record profits but don't blame us. And we're gonna fight back aggresively and Growth Energy is gonna be a new and major player in that effort."

Tags: biofuels ethanol news renewable fuels