Ethanol Face-off: GOP candidates debate hot-button issue

Mandate receives failing grade

by Sarah Steelman

Corn prices have risen dramatically since Missouri’s 10 percent ethanol mandate passed in January. So have food prices and farmers’ feed prices.

The cost of gas is 35 percent higher now than before the ethanol mandate. If ethanol was supposed to reduce gas prices, it has failed.

I believe in reducing gas prices and in reducing our reliance on foreign oil. I ask myself, and I’ve asked many Missourians, how do we get that job done?

The world has learned that when government chooses one idea, government pushes out other ideas. The Soviet Union collapsed because government controlled all of the options. The more government controls, the more people and their good ideas are choked out, and the economy sputters. We don’t need any more of that.

Taxpayers expect their tax dollars to be used wisely. Government policy can create short-term competitive incentives in a way similar to what we might do in our own households.

A policy that gives all energy ideas equal access to the market will produce better energy ideas – and lower prices – than a mandate.

Government can be an influence for the better. My tax credit proposals (www.sarahsteelman.com/taxes) will support consumers’ choices. We decide the kind of fuel that is cheapest. All of the innovators – and all of us – get the benefit.

Supporters say that the ethanol mandate is good for gas prices. History shows us that competition, not government mandates, lowers prices. Some special interests have studies that say otherwise, but I say studies are about the past. We can’t look in a rear-view mirror on energy policy. This situation requires a strong look at the future, and a vision for more and different fuel resources.

A reason the ethanol mandate passed: Many of the Missouri lawmakers who voted for the ethanol mandate have a financial interest in an ethanol plant or they receive farm subsidies for corn. (The Associated Press reported in May that about 20 past or present Missouri officials have received more than $400,000 in tax credits for investing in alternative fuels such as ethanol or biodiesel.) They got more money from their investments after the mandate passed than before the mandate passed. I don’t think this is right. In fact, I’ve issued an ethics reform proposal to make sure this can never happen again in Missouri.

Some people might truly think that ethanol reduces gas prices, and that if the mandate is repealed, gas prices will go up. I don’t think there is any risk of gas going up when the mandate is repealed. If corn-based ethanol can be produced as cheaply as gasoline and performs as well as gas, there will be a market for the product.

In this country, we know market competition is a better and fairer way of sorting out the facts. It’s a lot better than politicians and their mandates.

I support repealing the ethanol mandate. I think it’s the right thing for Missouri. I believe the energy policy I’ve proposed (www.sarahsteelman.com/energy) will do a better job. I hope you agree.

Sarah Steelman is Missouri State Treasurer. She can be reached at info@sarahsteelman.com.

Domestic supplies provide answers

by Kenny Hulshof

Seldom are situations caused by one factor and, even more rarely, is there a quick or reliable fix. And there is never a silver bullet. Many times a “quick fix” can cause more harm than good.

In such cases as the current debate surrounding ethanol, I look to expert opinion, scientific statistics and real data. Our nation faces challenging financial times, and some politicians choose to blame ethanol for many of those problems.

Let’s start with one key fact: Ethanol eases the pain we’re all feeling at the pump.

Don’t just take my word for it. That conclusion has been reached by academic economists, government experts and private market analysts.

Iowa State’s Center for Agricultural and Rural Development found that gas prices would be 29 cents to 40 cents per gallon higher without ethanol.

Officials from the U.S. Department of Agriculture and the U.S. Department of Energy agreed, saying, “Biofuels are already moderating gasoline prices. That impact is likely to grow substantially as more biofuels come to market. Efforts to repeal that mandate would hinder progress toward reducing our dependence on imported oil.”

Investors also can see what is really going on. Francisco Blanch, a commodity strategist at Merrill Lynch, found that the energy market is heavily reliant on ethanol. His report stated that “biofuels have become the single-largest contributor to world oil supply growth in recent years. Retail gasoline prices would be $21 per barrel higher, on average, without the incremental biofuel supply.” When that $21 per barrel is spread out over the yearly amount of gasoline purchased by the average American family, we see that ethanol is saving families $526 a year.

At this point, ethanol critics pivot to the argument that lower gas prices come at the expense of higher food bills or decreased gas mileage. Take a closer look at the facts.

According to the University of Missouri’s Food and Agricultural Policy Research Institute, the ethanol mandate will increase America’s food bill by 0.1 percent between 2007 and 2015. A study by the Agricultural and Food Policy Center at Texas A&M found that “corn prices have had little to do with rising food costs.” The Department of Agriculture and the Department of Energy have found “ethanol and biodiesel consumption is estimated to have increased the Consumer Price Index for all food by 0.10–0.15 percentage point.”

My support for domestic energy (www.kenny08.com/issues) such as renewable biofuels has been consistent with my strong belief that we should investigate and tap into every possible source of energy that is available within our borders. We should drill for oil in the Arctic National Wildlife Refuge and tap into the oil and natural gas under the Outer Continental Shelf. The 2 trillion barrels of oil shale in the Western United States are there for the taking. We even have heavy oil reserves right here in Missouri.

The answer to our energy needs is found in everything above – plus wind, solar, geothermal and conservation. We have the opportunity to address our energy needs by looking to the Midwest, instead of the Middle East.

Kenny Hulshof is a U.S. Congressman representing Missouri’s Ninth District. He can be reached at info@kenny08.com.