Tug of war over RFS – after the election

By Peter Graham, Guest Columnist

A lot of folks believe that, over time, soaring corn prices will mitigate rising oil prices by putting the cost of corn-based ethanol at a level with fossil fuels. And, corn prices have been bolstered by continuing drought conditions in the Upper Midwest.

However, Keith Bolin, president of the American Corn Growers Association doesn’t agree that corn can offset crude oil.

Bolin wrote in April 2008, that it takes three times as many bushels of corn to pay for a barrel of West Texas Intermediate Crude oil as it did just 10 years ago. He said while corn farmers have been receiving better prices over the past two years, the price increase “has only marginally offset higher prices over the same period. There are, he said, still just as many gallons in a barrel of oil and the same number of pounds in a bushel of corn.

“They both still have the same energy values as they did in 1997 or in 1950. It is very hard to reconcile why it takes 13 times more corn to buy a barrel of oil than it did in 1950. Where is the equity?” he said.

Further, Bolin was worried that state and federal policy makers are not cognizant of the damage that would be done if U.S. corn farmers were forced to rely on the $1.93 per bushel safety net in the last farm bill. A complete collapse of the U.S. farm economy would, he said, be inevitable at current oil prices (as they were in April).

“This is one of many reasons we cannot allow any erosion of the national renewable energy programs. A collapse of our fragile farm economy would not only spell the ruin of many farm families and rural communities, but would also choke the life out of the struggling national economy,” he said.

Back in 2008, Texas Governor Rick Perry unsuccessfully asked for a waiver of the Renewable Fuels Standard (RFS) and now has joined the chorus of late-comers (Arkansas, Delaware, Georgia, Maryland, New Mexico and North Carolina) asking for one again. Perry was unhappy with the continuation of the RFS by President Bush in the 2008 farm bill, and is opposed to it in the latest farm bill that still languishes in the back halls of Congress.

While the EPA needs to act on the waiver requests within 90 days of receipt, it does not have to act before the Nov. 6 election, which puts the controversy on the back burner for most politicos.

Bolin’s view is that until Gov. Perry can mitigate the impact of West Texas Crude on the farm economy, he “should avoid destroying the economy of rural America.” Livestock producers’ associations have not agreed with the corn growers and have jumped on the band wagon asking for the waiver to be granted.

In their collective view, higher corn costs have led to higher feed costs for them, so diminishing of the renewable fuels market for corn is a good thing. The Obama administration has said taking down the RFS would not lower feed costs in the short term, and the administration, which has heavily supported renewable fuels, is not likely to waive the RFS requirement. It looks like a fight looms ahead — but after the election.

I’ll see ya.

 

An Iowa native, Peter Graham has been a rural newspaper editor for 40 years. He currently edits a twice-weekly paper in Western Iowa. You can contact him at (712) 642-2791 or news@missourivalley times.com.

 

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