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DAVID KRUSE

By Staff | Dec 31, 2010

Ethanol haters have spent millions of dollars attempting to derail the ethanol industry so the extension of support in the tax bill was an expensive disappointment to them.

They will continue to throw more good money after bad by focusng on blocking Environmental Protectiuon Agency approval of E-15. They are also getting more desperate to show some results so will resort to bigger lies.

The assurances that they really do like ethanol and only oppose ethanol subsidies is the biggest lie of all. They want cheap corn no matter how dirty they have to get.

The ethanol haters and the ethanol makers agree on one thing – that the recent approval from EPA to allow E-15 to be burnt in vehicles newer than 2007, was a bad idea.

The ethanol haters didn’t want the ethanol blend increase at all. The ethanol makers want the ethanol blend approved for all vehicles. The EPA has yet to satisfy anyone.

Until now, U.S. automakers have professed to support ethanol. They have touted in ads how green they were, building flexfuel vehicles that plugged into ears of corn.

The attitude has changed as U.S. automakers and engine manufacturers teamed up with longtime ethanol haters like the Grocery Manufacturers Association and National Meat Association to sue EPA to block implementation of the new E-15 rule.

Rueters noted, “The suit asks the U.S. Court of Appeals for the District of Columbia Circuit to send the decision back to the EPA and also asks the court to review whether the decision violates the Clean Air Act.”

The EPA and private and public research studies have concluded that a 5 percent increase in the ethanol mix in blended gasoline has no impact on engines. All vehicles consume E-25 in Brazil with no negative result.

As U.S. automakers produced large numbers of the vehicles now consuming E-25 in Brazil, this proves that the vehicles they made can burn higher ethanol blends successfully and that if they can’t in the U.S., the inability is purposeful. There is absolutely no proof that ethanol damages older automobile engines.

Rueters reported, “Higher ethanol blends can corrode fuel lines and other parts in engines that have not been adjusted.” EPA is testing E-15 in older vehicles and will soon produce the test results that will support or contradict that statement.

We do not expect EPA to corroborate engine maker claims. EPA will require labeling of retail fuel pumps, restricting E-15 use. Automakers and engine manufacturers claim that consumers are too stupid to read or heed warnings, confusing them.

To most of the groups participating in the lawsuit, this doesn’t have anything to do with the ability of vehicles to safely use E-15, or concern for consumers.

It is all about the desire to limit ethanol production, creating a glut of ethanol by denying market access for the product that will financially damage ethanol producers so that they get cheaper corn.

There is not enough retail market access with the blend rate limited to E-10 for a 15 billion gallon corn-based ethanol industry as mandated in the Renewable Fuels Standard.

If ethanol haters can limit market access, they hope to limit ethanol production and damage the industry. It takes about E-12 to provide enough retail fuel market access for corn-based ethanol.

E-15 is actually needed for cellulosic ethanol. Ethanol from either type of feedstock source has to have access to the market to be consumed. Limit the access and you limit the industry.

Suing the EPA to restrict the ethanol blend is a ploy, pure and simple, to achieve an objective. Worry expressed over E-15 safety and suitability is just talking points to screen their actual motives. Ethanol haters are getting more desperate so their lies will get bigger.

Here in the U.S. we could use some creative ethanol policy. I think that the politicians in Washington know that failure to support the industry with a plan will not be tolerated politically.

That plan is still being shaped, but something needs to bridge the transition from ethanol subsidies to remove the target ethanol haters shoot at. A shift from a blender’s credit to a direct credit to producers at a reduced rate as well as Growth Energy’s blueprint for ethanol infrastructure is desirable.

The EPA’s struggle to raise the blend cap to 15 percent and efforts to build an ethanol pipeline from the Midwest production to East Coast demand are both way behind progress already made in Brazil.

Brazil had government support mandating use of E-25, building flex-fuel vehicles and the retail fuel infrastructure that handles ethanol, even an ethanol dedicated pipeline from production to consumption regions in Brazil.

These are all things that the U.S. ethanol industry wished that they could have and are willing to trade ethanol subsidies for. The U.S. ethanol industry has not received any more support than the Brazilian ethanol industry has. Here it was just delivered differently.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.

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