Tuesday, January 26, 2016

Biofuels, Iowa, and Bernie

Photo credit: Daniel Acker photographer / Bloomberg via Getty Images. Iowa State Fair 2015.

Ethanol is a political product. If you go to the Iowa Renewable Fuels Association website, there is a heading, "RFS is Key to Long-Term Renewable Fuels Success". Yes, indeed, this is because ethanol could not survive without the government mandate. Though it is useful as an oxygenator (or octane booster), it is not essential, as there are other good octane booster alternatives.

It is helpful to the ethanol and corn industry that former governor of Iowa, Tom Vilsack, has held his cabinet position longer than any other cabinet member. This month marks his seventh year as Secretary of Agriculture. Though the EPA bantered about on its decision for months about how to revise the mandates going forward, its final decision in late 2015 was favorable to corn producers and it is difficult to separate its decision from lobbyists and the current surplus of corn.

Now, let's take a look at some of Iowa's biofuel numbers. Because, no other state has as much at stake as Iowa when it comes to biofuels.

Iowa... is the number one state producer of renewable fuels. It produces 27 percent of the nation's ethanol which totaled 4 billion gallons in 2015. This used 1.3 billion bushels of Iowa's corn, or over half of its corn crop. It has 43 ethanol plants.

Iowa... is also the number one producer of biodiesel. It has 12 biodiesel plants and it produced 242 million gallons last year. To make this biodiesel, 66 percent is from soybean oil, and 10 percent was from distillers corn oil last year. Because the capacity of these 12 biodiesel plants is 315 million gallons, expect much higher production next year, now that the tax credit has been officially reinstated.

Iowa... currently has too much corn and not enough demand for it. Ethanol interest groups wish for more, or mandated E15. The USDA did come forward granting new, additional money for blender pumps in 2015 to the tune of more than 200 million dollars. Farmers input costs are not being met with today's low commodity/grain prices. That is why a team from the US Grains Council along with two ethanol industry representatives went to Asia last month to promote US ethanol exports. These types of activities are ongoing, as in any business.

To see how much ethanol was exported in recent years, see this chart from the EIA:

What about  advanced biofuels, or cellulosic ethanol, is that still pie in the sky?

Though we continue to hear about government money being thrown at it each year, you're never going to see a viable switchgrass (type of) operation because of logistics. No amount of technological advancements can or will ever overcome the logistical problems of a switchgrass biofuels operation. Iowa currently touts producing 55 million annual cellulosic gallons of ethanol out of its total of 4 billion gallons, but that  ethanol is also made from corn.

I keep an eye on the lobbyists for ethanol via various media outlets and it is a very, very powerful, active, well-funded lobbying operation. It is also very quick to respond with promotional media headlines when it sees the need to do so.

Since this post is relevant to the Iowa caucus and upcoming rather bizarre 2016 presidential race, I will share with you my idea that Bernie Sanders is going to be our next President. I came to that conclusion last week when I realized that some of the voters who don't like the Trump option will vote for Bernie instead, meaning Bernie has a better chance if Trump gets the Republican nomination. Though this may sound unfathomable, the economist, Robert Reich, today verified what I suspected...
Which explains a paradox I found a few months ago when I was on book tour in the nation’s heartland: I kept bumping into people who told me they were trying to make up their minds in the upcoming election between Sanders and Trump.

At first I was dumbfounded. The two are at opposite ends of the political divide. But as I talked with these people, I kept hearing the same refrains. They wanted to end “crony capitalism.” They detested “corporate welfare,” such as the Wall Street bailout.

They wanted to prevent the big banks from extorting us ever again. Close tax loopholes for hedge-fund partners. Stop the drug companies and health insurers from ripping off American consumers. End trade treaties that sell out American workers. Get big money out of politics.

Somewhere in all this I came to see the volcanic core of what’s fueling this election. read the rest...
People are fed up with the status quo, with hope and change that never changes.

In other headlines, journalists have pronounced that none of today's presidential candidates know much about food or agriculture. Which comes as no surprise given that only one percent of the population is involved in Ag these days. Everyone's a foodie know-it-all, but no one's a farmer.

This past year, I became caught up in our local off-year election issues. I learned a lot from that experience, and part of what I learned was how fragmented our population is, and how each age group and fragment ends up with their own method of communicating about an upcoming election. No longer is the local newspaper king, nor is the local newspaper funded well-enough to do a good job explaining things, and no longer is the cell-phone-monopolized population careful enough to dig deeper about the issues, which end up remaining superficial impressions upon which to base the individual voter's decision. Our local election ended up having surprising results that were unpredictable. I think the ever increasing fragments of voters within our nation will add to the chances of a Bernie-outcome. I predict that Bernie Sanders will be our next president, and ethanol policy is safe with him.

--by Kay McDonald 

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