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Should the U.S. government cut subsidies for corn ethanol? Comments by Ford CEO Alan Mulally hint at that, saying the government should support "one technology" (electrification), rather than spreading funding.  (Source: Hollandtown: Holland Farm: Corn Harvest)

More controversial is the proposal to block states like California from self-governance when it comes to setting stricter fuel economy standards.   (Source: treehugger)

Alan Mulally saved his company from bankruptcy, while peers GM and Chrysler went through government takeovers and restructuring. Mr. Mulally warns that the auto industry is seeing slowing sales this quarter.  (Source: Bill Pugliano/Getty Images)
Executive would like to see states banned from setting their own arbitrary standards

Ford Motor Company (F) CEO Alan Mulally is one of the most respected figures in the auto industry today, having been the only head of a member of the "Big Three" U.S. automakers to save his company from bankruptcy in the 2007-2008 financial crisis.  However, his new comments will certainly be considered controversial by politicians, lobbyists, and citizens alike.

I. Block States From Self-Governance of Fuel Economy?

Mr. Mulally met early Tuesday morning with House Speaker John Boehner (R-Dayton, Ohio); Rep. Fred Upton (R-St. Joseph, Michigan), chairman of the House Energy and Commerce Committee; and Rep. John Dingell (D-Dearborn, Mich.), a key supporter of the Detroit automakers. 

Later in the afternoon he attended a meeting co-hosted by Reps. Dan Benishek (R-Crystal Falls, Mich.); Bill Huizenga (R-Zeeland, Mich.); and Jeff Duncan, (R-Laurens, S.C.); with Rep. Hansen Clarke, (D-Detroit, Mich.) also in attendance.  He also met with Bill Daley, the White House chief of staff, and David Plouffe, senior adviser to President Barack Obama in a separate session.

At the meetings Mr. Mulally urged lawmakers to take Congressional action to implement a single consistent fuel economy standard and block states from proposing their own stricter standards.  

Despite the fact that Congress is indeed preparing a new set of fuel economy standards, which would extend the Corporate Average Fuel Economy (CAFE) through 2025, the proposal to strip states of the right to regulate their own standards to a stricter threshold is controversial.  

First, opponents argue that it strips states of their right of self-governance.  This is a place where Republicans, in particular find themselves in a philosophical dilemma.  Their party has recently run on a platform of state rights, but they have traditionally opposed letting states regulate their own emissions, with former Republican President George W. Bush moving to block California and other states from doing so.

Second, the decision would run afoul of a 2007 Supreme Court ruling 
in the case Massachusetts v. EPA, which concluded that states had the right to set their own stricter mandates.  The ruling allowed California to effectively sue the federal government and force it to stop obstructing its standard.  In the wake of the suit, President Obama instructed the U.S. Environmental Protection Agency and Congress to allow states to set their own standards.

The issue will likely be pushed.  Even as the U.S. debates the future of CAFE, California, the nation's most populous state, is moving to set its own stricter standards for 2025.  It will likely be followed by several other states that adhered to California's previous emissions policy, adopted by President Barack Obama for the entire nation.

II. Ford: Back "One Technology"

Mr. Mulally also urged members of Congress to back "one technology" if they were serious about alternative energy vehicles.

Ford Motor Company officials did not specify what this "one technology" was, but most construe it to mean electrified vehicles.  Ford has been less enthusiastic than its peers about the "other" leading alternative vehicle technology -- ethanol fuel.

The potentially implied proposal to ditch federal subsidies of ethanol and corn farming is a controversial one -- among corn farming states, at least.  Farmers have grown fat off billions in yearly government subsidies, with a major chunk of it coming from ethanol grants and mandates.  In total corn farmers drew $73.8B USD from 1995-2009 from the U.S. federal and state governments.

The pull of the corn farmers is particularly strong in the U.S. Senate, where the numerous low-populous farm states have a much larger representation.

The proposal may also target other alternative fuel technologies -- such as compressed liquefied natural gas (CLNG), which some say could supplement traditional petroleum, much like ethanol.

III. Ford in Trouble?

One thing mentioned by Mr. Mulally may trouble Ford investors.  He would not comment on Ford's Q2 2011 sales, but did say that the market is "slowing down … it's a little less than what we hoped for at the beginning of the year", according to The Detroit News.  

That could be a trouble sign as Ford and other automakers had seen strong sales over the past couple quarters.

If the American automakers are indeed starting to struggle once more, that could make the debates over ethanol and emissions even trickier.  After all, the automakers say that a strict 62-mpg standard could "kill" the American auto industry.  And any money in ethanol subsidies will likely come at the expense of government funding of electrification efforts, which the automakers will likely need to satisfy CAFE.

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RE: To Corn or not to Corn
By yomamafor1 on 6/2/2011 2:38:49 AM , Rating: 2
It's extremely hard to grow crops in North Korea, so maybe instead of spending 30% GDP on nukes and tanks, they could be IMPORTING food? There's not some mystical food shortage, it's not a depleted resource. It's self inflicted in their case.

Why spend 30% of your GDP on importing food, when you can spend the same amount of money on nukes, and the neighboring countries will donate food to you for free? You get free food, AND modern weapon. I agree it is self-inflicted, but again, did average North Korean ever have any choice?

Also, food is not a resource. It is a product that has to be produced from resources that are depleting and getting more expensive. When the cost of production is higher than the price you can pay for, food will not be produced, and there is a shortage.

Aren't you leaving out a HUGE factor? They eat 700 calories a day because the average North Korean can't afford to eat more. They get paid next to nothing, if they are lucky to be paid at all.

They can't afford food because their wage is lower than food. Then why is food so damn expensive? Because there is a shortage of them (Econ 101). If food is readily available, why are people being starved? Why do rich countries like the US and western Europe donate hundreds and thousands of tonnes of food to North Korea?

Wait, there's a world food shortage but there's enough so that countries can donate food to other countries? You contradict yourself.

Do you really insist on being right, that you choose to play word games? There IS a world food shortage as a whole. However, there are a few very fortunate countries (like US) that do not (yet) have widespread food shortages. So we do donate a portion of our food supply to some selected countries. That doesn't mean there is no world food shortage.

This is similar to claiming that although the unemployment in US right now is hovering around 9%, but since Iowa City, IA can't hire enough people, and must relocate workers from other states, so therefore unemployment in US doesn't exist. It is oxymoron.

I stand by my statement. Regional food shortages are NOT because the world doesn't have enough food. It's because of poor planning, bad infrastructure, and the lack of a thriving economy.

When people are so poor that they can't afford for the food to be produced, regardless of reason, it IS food shortage. I never linked North Korean's food shortage to the world food shortage (it was a mere counter argument for your "world food shortage does not exist), but it does contribute to the world food shortage, isn't it?

What's the reason there is a world wide shortage of food? Because not enough food is being produced. Sure, if you dedicate all arable land to food production, you might be able to feed everyone. But the question is, can everyone afford for the necessary amount of food to be produced?

Tell me again there is no food shortages world wide.

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