Backtracking with Barack — Corn Ethanol

Unexpectedly or perhaps surprising to me anyway, energy policy is actually getting debated. That’s a good thing even though I don’t really expected it to lead to the tough choices we need to make in the time frame we need to make them. To be honest, we are past the tipping point. We’re doomed. The only question left is when does it all unravel. A few wise investments and we might push out the end line a few decades but unless some new technology arrives on the scene in the next twenty years, our way of life will come to a sudden and crashing end.

I have never liked Barack Obama. In fact, I can’t stand Senator Dick Durbin of Illinois either. The reason? They voted for the Bush-Cheney Energy Policy, the worst piece of legislation ever to pass the Congress. Thomas Friedman referred to the bill as “the sum of all lobbies.” U.S. PIRG noted that the bill’s “heavy tilt toward big oil companies reflects the influence of Exxon Mobil and other oil companies on policy-makers in Washington, DC.” The Washington Post editorialized that the bill was a “piñata of perks for energy industries.”

Indeed, the bill contained $6 billion in subsidies to the oil and gas industry and $12 billion to the nuclear power industry through 2015. Past that, the sum is likely to approach $30 billion.

Although Sen. Obama voted for the legislation, he speaks as if he opposed it on the campaign trail, criticizing it repeatedly. At a presidential debate he said “You can look at how Dick Cheney did his energy policy…he met with oil and gas companies forty times, and that’s how they put together our energy policy.” He’s attributed the failure of our current energy policy to Congress’s “failure to stand up to the lobbyists.” In Pennsylvania he ran this deceptive ad.

Here’s Brit Hume debunking the Obama ad:

That’s Obama, one big deception. But Obama probably owes his presumptive nominee status to corn ethanol. Without his support for corn ethanol, it is unlikely that he would have won the Iowa caucuses and without that victory I think it fair to say his candidacy would have been finished by Super Tuesday. Winning Iowa gave him a boost. To win Iowa, Obama touted corn ethanol. From the New York Times:

When VeraSun Energy inaugurated a new ethanol processing plant last summer (2007) in Charles City, Iowa, some of that industry’s most prominent boosters showed up. Leaders of the National Corn Growers Association and the Renewable Fuels Association, for instance, came to help cut the ribbon — and so did Senator Barack Obama.

Then running far behind Senator Hillary Rodham Clinton in name recognition and in the polls, Mr. Obama was in the midst of a campaign swing through the state where he would eventually register his first caucus victory. And as befits a senator from Illinois, the country’s second largest corn-producing state, he delivered a ringing endorsement of ethanol as an alternative fuel.

Mr. Obama is running as a reformer who is seeking to reduce the influence of special interests. But like any other politician, he has powerful constituencies that help shape his views. And when it comes to domestic ethanol, almost all of which is made from corn, he also has advisers and prominent supporters with close ties to the industry at a time when energy policy is a point of sharp contrast between the parties and their presidential candidates.

In the heart of the Corn Belt that August day, Mr. Obama argued that embracing ethanol “ultimately helps our national security, because right now we’re sending billions of dollars to some of the most hostile nations on earth.” America’s oil dependence, he added, “makes it more difficult for us to shape a foreign policy that is intelligent and is creating security for the long term.”

Nowadays, when Mr. Obama travels in farm country, he is sometimes accompanied by his friend Tom Daschle, the former Senate majority leader from South Dakota. Mr. Daschle now serves on the boards of three ethanol companies and works at a Washington law firm where, according to his online job description, “he spends a substantial amount of time providing strategic and policy advice to clients in renewable energy.”

Mr. Obama’s lead advisor on energy and environmental issues, Jason Grumet, came to the campaign from the National Commission on Energy Policy, a bipartisan initiative associated with Mr. Daschle and Bob Dole, the Kansas Republican who is also a former Senate majority leader and a big ethanol backer who had close ties to the agribusiness giant Archer Daniels Midland.

Not long after arriving in the Senate, Mr. Obama himself briefly provoked a controversy by flying at subsidized rates on corporate airplanes, including twice on jets owned by Archer Daniels Midland, which is the nation’s largest ethanol producer and is based in his home state.

Jason Furman, the Obama campaign’s economic policy director, said Mr. Obama’s stance on ethanol was based on its merits. “That is what has always motivated him on this issue, and will continue to determine his policy going forward,” Mr. Furman said.

Asked if Mr. Obama brought any predisposition or bias to the ethanol debate because he represents a corn-growing state that stands to benefit from a boom, Mr. Furman said, “He wants to represent the United States of America, and his policies are based on what’s best for the country.”

Mr. Daschle, a national co-chairman of the Obama campaign, said in a telephone interview on Friday that his role advising the Obama campaign on energy matters was limited. He said he was not a lobbyist for ethanol companies, but did speak publicly about renewable energy options and worked “with a number of associations and groups to orchestrate and coordinate their activities,” including the Governors’ Ethanol Coalition.

Of Mr. Obama, Mr. Daschle said, “He has a terrific policy staff and relies primarily on those key people to advise him on key issues, whether energy or climate change or other things.”

Ethanol is one area in which Mr. Obama strongly disagrees with his Republican opponent, Senator John McCain of Arizona. While both presidential candidates emphasize the need for the United States to achieve “energy security” while also slowing down the carbon emissions that are believed to contribute to global warming, they offer sharply different visions of the role that ethanol, which can be made from a variety of organic materials, should play in those efforts.

Mr. McCain advocates eliminating the multibillion-dollar annual government subsidies that domestic ethanol has long enjoyed. As a free trade advocate, he also opposes the 54-cent-a-gallon tariff that the United States slaps on imports of ethanol made from sugar cane, which packs more of an energy punch than corn-based ethanol and is cheaper to produce.

“We made a series of mistakes by not adopting a sustainable energy policy, one of which is the subsidies for corn ethanol, which I warned in Iowa were going to destroy the market” and contribute to inflation, Mr. McCain said this month in an interview with a Brazilian newspaper, O Estado de São Paulo. “Besides, it is wrong,” he added, to tax Brazilian-made sugar cane ethanol, “which is much more efficient than corn ethanol.”

Mr. Obama, in contrast, favors the subsidies, some of which end up in the hands of the same oil companies he says should be subjected to a windfall profits tax. In the name of helping the United States build “energy independence,” he also supports the tariff, which some economists say may well be illegal under the World Trade Organization’s rules but which his advisers say is not.

Corn ethanol only nets 1.3 times the fossil fuel energy required to produce it, sugar-based ethanol can return 8 times the fossil fuel energy. And corn ethanol, while cleaner, than octane, pales in comparison to sugar ethanol.

So how green is Barack Obama really? Not very. In terms of energy policy, Obama is a third term for Bush-Cheney. From the Washington Post:

Given that energy appears likely to be a dominant issue in this election season, Barack Obama’s campaign may want to settle on a more consistent message when it comes to subsidies for ethanol, the corn-based alternative fuel that is hailed by some as a key resource in weaning America off foreign oil and forestalling global warming but lambasted by others as a wasteful boondoggle that is driving up food prices.

Since entering the Senate in 2005, Obama has been a staunch supporter of ethanol — he justified his vote for for the Bush Administration’s 2005 energy bill, which was favorable to the oil industry, on the grounds that it also contained subsidies for ethanol and other forms of alternative energy, and he has sought earmarks for research projects on ethanol and other biofuels in his home state of Illinois, the second-highest corn-producing state after Iowa. Obama’s support for ethanol is shared by many farm state senators (even Hillary Clinton came around after an ethanol industry took root in upstate New York) but it contrasts sharply with John McCain, who has for years been so critical of the subsidies that he decided not to compete in the 2000 Iowa caucuses.

Today, in a New York Times article on Obama’s support for ethanol, Jason Furman, the Obama campaign’s new economic policy director, is quoted saying that Obama’s stance on the issue was based on the merits, a determination that ethanol subsidies are in the national interest. “That is what has always motivated him on this issue, and will continue to determine his policy going forward,” Furman said. The article continues: “Asked if Mr. Obama brought any predisposition or bias to the ethanol debate because he represents a corn-growing state that stands to benefit from a boom, Mr. Furman said, ‘He wants to represent the United States of America, and his policies are based on what’s best for the country.’”

It was the expected answer during a presidential campaign — except that it flies in the face of what Obama himself said on the issue a few months ago. Asked about his support for ethanol during a press conference at a gas station in Indianapolis in April, Obama was remarkably candid in explaining why he backed the subsidies: “Look, I’ve been a strong ethanol supporter because Illinois … is a major corn producer,” he said. He went on to say that he was concerned about reports that ethanol was helping drive up food prices, and that he saw ethanol as merely a transitional option that would eventually give way to biofuels that were more efficient and has less of an impact on food prices, such as ones made out of switchgrass.

Furman came on board the campaign only this month, so it is understandable if he is not entirely on the same page yet with the candidate. The fact is, though, that Obama’s record in the Senate has been very clearly influenced by what he viewed as the needs of his Illinois constituents, particularly those in “downstate” Illinois, where Obama has pointed to his popularity as proof that he can win over voters in more rural and conservative areas. Obama is supporting the new farm bill, which McCain also derides as wasteful, because he believes it will help farmers in his state; he backed last year’s $14 billion Water Resources Development Act (also opposed by McCain) after making sure it included money to upgrade locks on the Illinois and Mississippi rivers) and he backed huge subsidies last year for liquified coal — a highly controversial technology that would be a boon for Southern Illinois mines — before backing away from the idea under fire from environmentalists.

If there is a single issue to care about or to vote on, it is energy. Our lifestyle depends on it and we have wean ourselves off oil as a transportation fuel within 15 years or 20 years tops. If I vote for John McCain it will be because the election is close and because of McCain’s better energy plans and the fact that he didn’t vote for the Bush-Cheney Energy Policy, unlike Barack Obama.

From my blog, By The Fault.