In Iowa, Ethanol A "Sacred Cow" For Presidential Hopefuls

By Andrew Stern
Reuters
Friday, November 9, 2007; 8:56 AM

MUSCATINE, Iowa (Reuters) - For Iowans, ethanol is a home-grown success story few presidential candidates would dare sully in their search for votes as the harvest season ends and campaigns ramp up in earnest.

In stump speeches and position papers, Democratic and Republican hopefuls vying for Iowa's January 3 first-in-the-nation caucuses pay regular homage to the biofuels industry.


The industry has created tens of thousands of jobs in Iowa -- and more than 150,000 across the United States -- and is credited with lifting the prices paid to farmers for their crops, and even eased the pain at the gas pump.

"Anything that helps the farm economy gets votes here," said Kenny Strasser, 62, whose family raises grain crops in Marengo.

But all is not well in the biofuels industry.

Ethanol plants in Iowa, the leading U.S. state for both corn and ethanol production, are struggling to make a profit despite soaring oil prices. A few plants on the drawing board have halted construction as price margins have shrunk due to a doubling of corn prices to near 10-year highs. Demand from ethanol producers consumed a quarter of the U.S. crop.

The country's ever-expanding ethanol output of 7 billion gallons (32 billion liters) this year, which gets blended with gasoline usually at a 10 percent ratio, does put a dent in America's growing appetite for gasoline, which is roughly 140 billion gallons (636 billion liters).
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"It's tough because of the disconnect between ethanol producers and the consumer," said Monte Shaw, a spokesman for the Renewable Fuels Association in Des Moines. Consumers want blended fuel, but cannot always get it, he said.

Regional gluts of ethanol, pushing down prices, have been caused by purported distribution bottlenecks. But Shaw said the problems were illusory, created by oil companies resistant to a competing industry's product.

Washington Post.com, November 9, 2007