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DAVID KRUSE

By Staff | Mar 7, 2014

I have probably used this analogy too much, but you can have a tractor with a big engine, roaring with smoke pouring out the stack, but if the tires are bald the horsepower doesn’t produce any traction, and little is accomplished.

That is how I see the Iowa Legislature relative to the creation of the biofuels industry in the state.

Iowa politicians profess strong support for ethanol and biodiesel, and revel in the success of those industries and the economic contribution they perceive they have helped develop.

I hear their engines roaring, but when I look down, their tires are spinning as they have contributed next to nothing toward the creation of this valuable industry and, in fact, spent some time parked in front of it.

My perception is the Iowa ethanol industry developed in spite of the Iowa Legislature rather than because of it. I must not put as much value on the bumper stickers on state vehicles promoting ethanol as the Legislature does. That was the only state mandate we ever got out of them.

I listened to politicians pontificate on how proud and supportive they are of the biofuels industry at the Renewable Fuels Association summit last month. Most in the biofuels industry seem to be good with that given the battle being waged with Big Oil and the Environmental Protection Agency.

But really what does that do for us? What should the Legislature be doing for the ethanol industry? I have some suggestions.

What the battle with Big Oil is all about is market share. They were begrudgingly willing to concede 10 percent ethanol blends for the octane and carbon reduction of emissions, but that is where they draw the line.

Then they told every lie, bought every politician that they could, and filed every legal roadblock possible to block E-15 or blender pumps to limit consumer access to higher blends.

Yes, we need EPA to implement the RFS in the way Congress wrote into the law. Republicans have been blasting the President’s use of executive power as an “imperial presidency” and the proposed reduction in the RFS volume by EPA would be a glowing example of just that.

The RFS was clearly written to expand biofuel use and the Obama Administration would completely turn that around by reducing volumetric quantities of biofuel consumption.

While we need the RFS implemented correctly, there is also a need for greater market access in order for consumers to buy more biofuel to utilize the mandated quantity of biofuel.

The horsepower doesn’t do us any good without traction to the ground. The only way to expand consumer access for biofuel is through E-15 blender’s pumps.

Big Oil was successful in getting USDA incentives and subsidies for blenders pumps stripped from the farm bill.

You can’t produce from upward to 36 billion gallons of biofuel unless there is a market for it. How else besides E-15 and blender’s pumps is that accomplished?

The export outlook for biofuel looks good, but we are not going to export our way to consuming 36 billion gallons of biofuel.

The RFS is all about U.S. energy independence, not exports. Ironically, EPA did not remove provisions for subsidizing cellulosic ethanol development and the President even promoted more cellulosic research, but more horsepower is not worth anything unless there is some tread on the tires.

It takes both to move biofuel forward. The RFS is the engine and market access through higher E-blends is the traction to boost consumption of biofuel.

It was nice of the Iowa Legislature to unanimously resolve to support the Federal RFS, but what are you guys going to do about it?

What contribution to traction can the Iowa legislature make?

Every fuel station in Iowa should have either an E-15 or blender’s pump. The Governor and Legislature has the wherewithal to put together incentives to make that happen.

They have programs, but they’re not near aggressive enough. Iowa could lead this time instead of Minnesota.

After all, Iowa is the leading biofuel producing state. This is not mandating consumers to use ethanol; it is creating the opportunity for consumers to choose biofuel.

It should not take much incentive for a farm cooperative like CENEX, to get on board with a blender’s pump in all its stations.

Why would there be a Cenex station in the entire country that doesn’t sell E-15 and have a blender’s pump?

I don’t want to pick just on Cenex, as Casey’s and Kum & Go ought to have blender’s pumps in every station or explain why not.

They have no good excuse.

Put a bill in front of the Iowa Legislature that would result in installation of an E-15 or blender’s pump in every retail fuel station in the state and then gauge which of them really supports the biofuel industry, or who just wants to stick with their mandate on bumper stickers.

There is lots of noise and smoke coming from politicians, but where is the traction?

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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