Is this Ethanol’s Last Chance for Success?
By Lynne Finnerty
The year is 1979. The United States is in an oil crisis created by the Iranian Revolution that has disrupted Middle East oil exports. President Jimmy Carter famously wears a sweater during a speech in which he asks Americans to turn down their thermostats and conserve energy.
Drivers wait in long lines at gas stations. The price of oil goes from about $15 a barrel to almost $40 a barrel in just a year, adding to inflation woes.
The panic over oil leads to greater interest in gasohol, an alcohol fuel that can be made from fermenting corn and other agricultural feedstocks. Farm organizations promote the idea that, like adding chicory to coffee, gasohol can stretch the nation’s fuel supply. Congress picks up on it and debates national goals and tax incentives for expanded gasohol production.
Then, some of the nation’s newspapers go on a campaign against federal subsidies for gasohol. An April 26, 1980, Washington Post editorial argues that further federal help for gasohol producers “will inevitably raise food prices” and calls the subsidies “wanton public policy.” Of course, the editorial doesn’t mention subsidization of the petroleum industry through billions of defense dollars spent to protect oil wells and pipelines in volatile parts of the world.
As the energy debate continues in Washington, the Iranian hostage crisis drags on, a national election nears, oil production picks up, lines at the pump shorten, a new season of Dallas begins and everyone moves on. Gasohol isn’t the hot topic anymore.
Does any of this sound familiar?
Sometime later “gasohol” became known as “ethanol.” However, ethanol today faces the same old criticism that helped deep-six gasohol and postpone our 1970s efforts toward greater energy independence.
Once again, concerns about the reliability of the nation’s oil supply – along with new issues – have stirred interest in the corn-based fuel. Security concerns in the Middle East, record-high oil prices (a new record of $88 a barrel was reached in October) and Hurricane Katrina’s disruption of U.S. oil refineries and offshore rigs have raised supply worries. Meanwhile, increased awareness about global warming is driving interest in energy sources such as ethanol that emit less pollution.
Once again, national newspapers are raising criticism over making fuel from a food source, although corn farmers planted about 12 million more acres of corn this year than last and are expected to harvest a record crop. Misconceptions spread about ethanol’s impact on food prices.
A predicted shakeout in the industry due to production capacity outstripping demand has contributed to a decrease in ethanol prices and investment. Several planned ethanol plants around the country are on hold. The criticism hasn’t helped.
The emergence of gasohol in the late 1970s was ethanol’s first chance at success. The phenomenal growth of the U.S. ethanol industry since 2000 has been ethanol’s second chance. There may not be a third chance.
Ongoing federal support, in the form of greater production goals and extended tax credits, is needed to ensure we don’t lose this opportunity again.
Lynne Finnerty is the editor of FBNews, a publication of the American Farm Bureau Federation.
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