Nightmares in the ethanol dream

Although Bush, Congress and most Midwest politicians champion corn ethanol, some economists, scientists and even a few farmers benefiting from the grain-alcohol push oppose the ethanol surge for a variety of reasons.

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buy this photo Cargill owns the ethanol plant in Blair. The plant, which went online in 2005, has a capacity of 85 million gallons a year. (Kate Veik)

Facing cameras, microphones and rows of lawmakers, the son of an oil man — and a former oil man himself — told the nation once again it had been dependent on oil, particularly foreign oil, for far too long.

President George W. Bush in his 2007 State of the Union address said hope and opportunity for Americans ultimately depended on a stable energy supply.

Through bursts of applause, the president emphasized why ethanol and other alternative fuels make more and more sense, and why they are vital if the U.S. is to curb its oil addiction.

“This dependence leaves us more vulnerable to hostile regimes and to terrorists — who could cause huge disruptions of oil shipments, raise the price of oil and do great harm to our economy,” Bush said.

As he spoke, the price for a barrel of oil was about $55. It reached near $150 this summer. On Tuesday, the price remained just below $100.

To achieve the ambitious vision laid out in his address, Bush mandated 35 billion gallons of renewable and alternative fuels be available to Americans by 2017. Of this amount, 16 billion gallons is to be corn-based ethanol — an amount that would require about five times Nebraska’s 2006 corn production.

Although Bush, Congress and most Midwest politicians champion corn ethanol, some economists, scientists and even a few farmers benefiting from the grain-alcohol push oppose the ethanol surge for a variety of reasons.

“I don’t use ethanol in my car, and I know that sounds stupid for a farmer to say,” said Merlin Stuhr, an eastern Nebraska corn and soybean farmer. “It just costs too much money to use because my car doesn’t go as far on ethanol as it can on oil.”

Amory Lovins, a veteran U.S. energy adviser and co-founder of the Rocky Mountain Institute think tank, said if he could have the ear of a mayor in an ethanol town right now, he would say: “Enjoy it while it lasts.”

When all is said and done, the ethanol debate raises several important questions:

* What underscores the fierce political allegiance to ethanol?

* Is ethanol a valid alternative outside the Corn Belt?

* In the end, is ethanol a boon or bane?

“It all boils down to economics,” said Ernie Goss, a Creighton University economist. “This area benefits from it right now, so the political support will follow.”

Agribusiness contributed $250 million to federal candidates from 2000 to 2008, according to the campaign finance Web site Open Secrets: http://opensecrets.org.

“High oil prices — and a high oil proportion that comes from outside countries — was the motivation to find ethanol,” Goss said. “It motivated Congress to support the industry. This bred a situation where companies see the ability to gain profit from ethanol. Then the states chimed in with their own support because state politicians are looking to help their local constituencies.

“Ethanol is just bad decisions by the government,” Goss said.

But to ethanol’s many political supporters, the alternative fuel is the cure for a number of problems: It breathes life into dying rural communities, they argue, and puts money into the hands of farmers, allowing them to create a more sustainable world.

Still, ethanol remains rich in inconsistencies, some skeptics maintain. Some farmers, political scientists, economists and politicians continue to see nightmares in the ethanol dream.

One such nightmare is an irony within the industry: While the higher corn price is a boost to corn farmers, it also increases the cost of ethanol production.

Midwest residents are beginning to see an industry unable to sustain itself, leaving local plants to either close or be gobbled up by large corporations, Goss said.

Outside the Midwest, there’s little enthusiasm for ethanol.

“No one is talking about ethanol outside the corn-growing states,” said Jordan Lieberman, publisher of Campaigns and Elections magazine. “And truthfully, people in the Northeast and West don’t necessarily care about supporting ag families.”

Nevertheless, the reasons to support ethanol remain clear to many politicians.

Annette Dubas, a Nebraska state senator and a corn and soybean farmer, vigorously supports ethanol legislation.

“I understand farmers and agriculture and the struggles they go through,” she said. “I ask, ‘How can we be part of a broader solution?’”

Energy independence may be the broader solution, she said.

“Every dollar sent out is one less spent here,” Dubas said. “Keep the dollars in the hands of the farmers. Do it so we can be less dependent on foreign oil.”

Scott Kleeb, Nebraska’s Democratic nominee in the 2008 U.S. Senate race, said ethanol is “Nebraska’s chance to rejuvenate the pioneer spirit.”

Rejuvenation comes from increased jobs and the pride farmers gain from being on the frontier for alternative energy sources, Kleeb said.

To those running for office, supporting ethanol is comparable to supporting Midwest families’ values and way of life.

“Ethanol is political football for votes,” said M.E. “Bus” Whitehead, founder of Lincoln’s Whitehead Oil. “If I were campaigning in Nebraska … I would love ethanol.”

Still, some see ethanol as a romance gone awry.

Shawn Greiner, a hog farmer from southeast Iowa, has seen the number of ethanol plants in his state reach a peak. Last year, he said, ethanol companies were promising a plant on every corner, but now the companies are not making much money, if any.

“No new plants are being built,” he said. “They wanted to have one in my town next to the biodiesel plant. But they can’t get enough money. And I even heard they are thinking about shutting down the biodiesel plant.”

He said input cost — the price of corn — was too high.

Goss, the Creighton economist, said the ethanol industry is no different than any other infant industry: “It’s experiencing a shakeout. Some companies are doing well. Some are not.”

Two years ago, Linda and Lloyd Eichenberger watched Global Ethanol, an Australian company, buy the locally owned ethanol plant near their northern Iowa town, Lakota. They had invested in the plant four years earlier.

“There was opposition,” Linda Eichenberger said. “People wanted to keep it local. They didn’t trust Australia.”

She said profits were supposed to double or triple when Global purchased it, but they have not. The couple probably won’t invest any more in the plant.

Another challenge created by ethanol relates to land value. Because the price of corn has increased, the value of Midwest farmland has increased, making farming more costly for people renting or buying farmland.

In fact, by Jan. 1, 2008, the average value of Nebraska agricultural real estate had reached a record high: $1,460 an acre, according to statistics from the U.S. Department of Agriculture. The value of cropland rose even more — by 20 percent over the previous year — to $2,270 an acre.

State Sen. Dubas said she is looking at other forms of alternative energy.

But national politicians resist discussing corn ethanol’s faults, said Lieberman, the magazine publisher.

“They can be excellent on the stump and speak intelligently without communicating anything they don’t want to,” Lieberman said. “So, to avoid a corn ethanol confrontation, they will just go right back to national security.”

Because of the money intertwined in the relationship between ethanol and national security, Goss said he could see a storybook ending.

“If I were to write a great book,” Goss said, “it would be about an ethanol plant going up in a rural community. And a guy in town starts cooking up something in his cellar that would make corn-based ethanol obsolete. Then the ethanol, big-corn guys come and bump him off.”

Cassie Fleming of Fort Collins, Colo., is a senior journalism and political science major. She wrote this as part a year-long depth reporting class on ethanol.

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