Ethanol as a Bargaining Chip for 2008 Presidential Hopefuls

Washington DC March 13, 2007; Nevermind the myriad reports which show the costs of making ethanol far out-weigh the savings realized by its users, the corn-based fuel has once again made its way to the Presidential campaign trail with some unusual suspects singing its praises under no uncertain terms.

It is no secret to the politically astute the importance of first impressions. For a Presidential hopeful the first real test of Commander-in-Chief “might” follows early visits to the states of Iowa and New Hampshire. Perhaps small beans when compared to the bigger, more population-dense states of New York, California and Florida, these states beloved for their respective corn and granite supplies, pack a wallup in the early gallup polls and have a big say in who makes it and who doesn’t in the race for the Oval Office.

These states, by mere virtue of their critical positions as the first states (Iowa being the first) to hold national presidential caucuses to select delegates to the state convention and the two major-party candidates for President, make people say and do the darndest things.

In 2004, it was Howard Dean’s complete disregard for the verisimilitude of Iowa’s Bourgeoisie that dropped him from his rank as the No.1 Democrat to the No. 3 Democrat… in a hurry. And as Dean – a bona fide contender for President by several accounts prior to the Iowa caucus – took to red-face on national television, shouting, pounding his fist, gritting his teeth, declaring his virtual conquest of every state in the Union after conceding in the most important state to two others from his party, voters soured at the prospect of a candidate who made anger and his inability to deal with it a staple of his campaign.

This time around, Iowa is shaping up to be even more out of square, no pun intended. Despite Dean’s absence, eradic behavior is expected to run rampant once again – this time around a little known bargaining chip called ethanol.

With a topography consisting of gently rolling plain, particularly rich and deep in topsoil, Iowa’s 2,966,334 people rely heavily on the federal government’s support of a vibrant agricultural sector that includes generous subsidies for corn growers.

It is such the case that some Presidential candidates have decided to skip the Iowa caucus, especially those who oppose ethanol subsidies, and instead, use their resources in other early states such as New Hampshire and South Carolina. For those who enter the caucus race in Iowa, an enormous amount of time and resources is expended in an effort to reach voters in each of Iowa’s 99 counties.

Because this Presidential race has a particular focus on fuel efficiency and securing our nation’s energy independence from troubling regions of the world, the ethanol “nay-sayers” are about to become the “yay-sayers.”

It was reported in CongressionalDaily that 2008 Republican Presidential candidate Sen. John McCain (AZ), who early on at the turn of the century declared ethanol a “giveaway to special interests in corn-growing states at the expense of the rest of the country,” has altered his stance in recent showings in Iowa.

Before a group in Des Moines, McCain declared himself a “strong” supporter of the fuel particularly considering the nation’s need to curb greenhouse gas emissions and reduce its dependency on oil. “I had my glass of ethanol this morning, and I’m feeling good,” McCain told the group. “I hope you did, too. Tastes good.”

Meanwhile, Illinois Senator Barack Obama – who has fared well on several high-profile likeability scales (Oprah Winfrey being among them) is in the midst of co-sponsoring a bill with Senate Agriculture Chairman Tom Harkin of Iowa that would require the U.S. fuel supply to contain 60 billion gallons of renewable fuels by 2030.

Ethanol producers are getting support from other angles too, including their friends at America’s corn lobby. The National Corn Growers Association has recently bowed down to budget wary lawmakers and decided to end its work on a costly proposal that would’ve triggered direct crop subsidy payments when farm net incomes drop more than 30 percent below the previous five-year average. In exchange, they are shopping a plan to tie some subsidies to revenue rather than production levels, a welcomed change for corn farmers enjoying soaring revenue as ethanol demand drives up prices. [Note: As the value of crops rise so too does the farmer’s risk.]

With all this attention and support building on the campaign trail and elsewhere, it makes you wonder with what information will lawmakers in Washington, currently considering changes to Corporate Average Fuel Economy (CAFE) rules, be influenced – that of the corn-craved Iowans or experts from the auto industry it seeks to regulate?

On Wednesday, the heads of Detroit automakers GM, Ford and Chrysler, along with Toyota North America President Jim Press, will testify before an emboldened House Energy and Commerce subcommittee on energy and air quality. Rep. Ed Markety (D-Mass.), a senior member on the committee, and fellow House Democrats intend to push automakers to accept higher fuel-economy standards. Markey said he planned to introduce legislation Tuesday, March, 13th that would mandate a fuel-efficiency increase to 35 miles per gallon by 2018, with a further increase of 4 percent a year afterward.