Ethanol counting on campaign promises

Chicago Tribune
By Joshua Boak Tribune reporter
December 12, 2008

Obama pledged his support, but policy, interests may collide

Record corn prices drove VeraSun Energy into bankruptcy. Shares in Aventine Renewable Energy are trading for less than 50 cents, down 99 percent from their peak. Plans for 19 ethanol refineries were recently canceled, including nine in Illinois.

And because of its lower energy content, ethanol blend E85 effectively costs drivers about 30 cents more per gallon than gasoline, hurting its acceptance as an alternative fuel.

Promises of additional government support for ethanol producers from President-elect Barack Obama might not be enough to immediately rescue a business near and dear to farmers. Ethanol is a crucial part of Obama's pledge to limit the use of foreign oil, a policy that connects energy to national security and economic development.

Government mandates established a demand for ethanol that proved greater than what the corn harvest could provide. That drove up corn prices and slashed the profit margins of refiners. Additional government efforts to strengthen the industry could only prolong that cycle.

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