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"We'll tell you next month" is the likely word from the EPA

Stop me if you've heard this one before.  It's the eleventh hour and the Obama administration is facing a crucial decision, one that could have a deep impact on the nation's economy and a united voice of experts is facing noisy opposition from special interests.  It's game time and the administration is on the field, ready to make the big play... and they instead choose to punt.

That's the likely scenario according to The Detroit News regarding ethanol waivers, a decision which was supposed to be made this week by Obama's iteration of the U.S. Environmental Protection Agency (EPA).

I. Federal Government Backs Corn Ethanol Despite Massive Drawbacks

The EPA derives its power to regulated fuel economy from the Clean Air Act of 1963 [PDF], a law which was most recently amended in 1990 by Congress.  A key question in recent years is whether the EPA can dictate what fuels the market should sell or blend.  The last two Presidents -- Barack Obama and George W. Bush -- argued the answer to that question is "yes".  The most crucial effort to that objective was the Energy Independence and Security Act of 2007 (EISA), signed into law by President Bush.

Under the EISA, which has been actively backed by President Obama, each year gasoline sellers in the U.S. must blend in more and more ethanol to help the U.S. meet "targets".

pumping fuel
President Bush and Obama have backed the federal government manipulating the economy to push corn ethanol at the pump. [Image Source: Nation Corn Growers Assoc.]
But despite its status as America's most used alternative fuel, serious questions surround ethanol and whether it really helps the environment at all.  While domestic ethanol production does offer a small shred of domestic security by removing some dependence on volatile foreign sources, studies have also shown that it actually increases greenhouse gas emissions and increases food prices.

In other words, the body of current evidence clearly points to corn ethanol -- the most abundant form of ethanol in the U.S. -- being bad news for both the U.S. consumer and the environment.

Automakers also say that higher blends of ethanol will damage the engines of older vehicles, in turn creating both economic problems.  The EPA dubiously says it knows the science better than the people who made the vehicles, arguing that the automakers are liars.

Obama bribery wide
Obama and Bush both backed big corn special interests. [Image Source: Politically Incorrect]

In the midst of all the issues, why is there still a modicum of support for government manipulation of the fuel market in corn ethanol's favor?

Big corn has long been one of the nation's most powerful special interest.  Corn farmers have benefited from 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.

II. Big Corn v. Everyone Else

Indeed the latest debate regarding ethanol comes down to "corn farmers" vs. "everyone else" -- including their fellow farmers.

Amidst a record drought, feed prices are soaring.  Livestock farmers have resorted to feeding their cows candy to try to keep from going bankrupt or letting their herd die.  Meanwhile, corn is being actively fermented (or wasted, according to critics) into ethanol, putting further pressure on prices.  And the EPA's fine-backed blending demands are the key factor driving that trend.

Farm drought
Without intervention, record corn prices coupled with drought may push small farms out of business. [Image Source: US News]

The corn farmers argue that they can't release information showing what their yields are; information that could validate the desperate farmers claims.  Instead, their argument boils down to "just trust us", as they fight a potential EPA waiver to help the struggling farmers.

The Michigan Farm Bureau comments "[We don't believe keeping the blending targets] would severely harm the economy of Michigan at this time. We do not have final harvest numbers, making it premature to determine what our total crop supply will be in 2012."

Likewise The National Corn Growers Association writes [PDF], "We believe the burden of proof for severe harm to the economy falls on the petitioner. We believe the petitioners have failed to establish this proof, since higher feed prices are only one piece of a complicated economic puzzle."

III. Blending Targets May Kill Small Farmers' Businesses

On the other side stands a united group of farmers, state, and federal politicians.

Corn prices are up 60 percent on the year, and food prices are expected to rise 3.5 percent or more this year -- and more next year -- largely due to ethanol pressure.  Corn prices have jumped 400 percent since the federal government backed corn ethanol under the Bush administration.

Eight state governors and 200 members of Congress have written a letter (on behalf of the slightly ironically named National Pork Producers Council) to the EPA pleading with it to relax blending rules via a waiver, at least for the rest of the year.  Delaware and Maryland's governors write that without a waiver the EPA would be creating "the loss of thousands jobs."

A number or researchers also signed a letter calling for a waiver.  Among them is John M. DeCicco and Ivette Perfecto from the University of Michigan School of Natural Resources and Environment.  They write, "The (Renewable Fuel Standard) diverts potential food crops to produce fuel, which drives up food price volatility and global food prices."

corn profits
Big corn donates deeply to federal politiicans, who in turn reward it with billions in subsidies.
[Image Source:]

It would be awfully hard for the Obama administration's EPA to deny the waiver in the midst of such overwhelming support.  On the other hand, it would be equally hard to turn their back on big corn special interests.  Those affiliated with the National Corn Growers Assoc. alone poured close to $500,000 USD to candidates on both sides of the aisle in 2012 [source] (the majority went to Republicans, likely due to their more critical stance on ethanol, which big corn hoped to soften).

IV. Silence From the EPA

The EPA released a brief comment remarking, "EPA is completing its review and analysis of the RFS waiver requests and the agency plans to reach a decision shortly."

But Tuesday's deadline for a decision came and went without any word about the status.

Punting a football
The EPA appears ready to punt on the waiver. [Image Source: How to Punt a Football]
Late last year Congress finalized the cut to corn ethanol's tax subsidy.  But the influx of money from big corn has some on The Hill calling for a renewal of an effort to force corn ethanol on the consumer, regardless the cost to the economy and the environment.

Amidst that backdrop, the only noise coming from the EPA is the sound of crickets as the waiver requests are punted deeper downfield.

Sources: The Detroit News, Fox News

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RE: Face punches for all
By JediJeb on 11/14/2012 6:18:04 PM , Rating: -1
While I thing there are better things to do with corn than make fuel from it, it really burns me how farmers get dumped on for trying to make a living. One of the craziest things to sensationalize it is this statement

Corn prices have jumped 400 percent since the federal government backed corn ethanol under the Bush administration.

I checked the prices just now, and they are under $8/bushel, sure that is 400 percent more than $2/bushel it was a few years ago, heck it is 400 percent more than it was some time last year too. But guess what, corn was selling for $2/bushel 25 years ago too at certain times of the year. So I guess it is ok for farmers to have a stagnant price for their crops for over 25 years while every other job gets pay raises each year. A tractor that cost $5000-$7000 back 30 years ago now cost around $35,000-$50,000, and the diesel for that has increased almost 400 percent in price as well, but corn should still be selling for $2/bushel like it has been for decades because everyone wants cheap Fritos.

People in the US have taken affordable food for granted for years. Most of the reason that food is so cheap is because of the subsidies, though most of that money ends up in the hands of the middle men instead of the farmers. When I was growing up on a farm in the 70's-80's most farmers survived because they could get their kids free lunches at school and we raised most of our own food, and yet still most farmers lived near the poverty level. Are farmers to be slaves to the rest of the country so most other people can afford to buy their iPhones and PlayStations instead of spending their money on food?

Make no mistake, Big Corn has nobody's best interests in mind, except their own bank accounts.

Just as autoworkers only have their own bank accounts in mind, or cars would cost half as much as they do now. Same as doctors and hospital staff or health care would cost less, or home builders, or computer programmers, or any other occupation. Why don't computer programmers work for $20,000 per year so we can enjoy lower cost software?

Sorry for the rant, and as I said corn ethanol in my opinion is not the best way to go for fuel purposes. I do have a problem though when people how probably have never worked on a farm begin to bash agriculture. Even when it is suggested that maybe they use switch grass to make ethanol people complain that farmers will then grow switch grass instead of corn because it will pay them better, but why should a farmer be forced to use their land in a way that doesn't maximize their profits? If a company did that then the share holders would be suing them for malfeasance because they were not running the business in a manner that maximized profits. If farmers can be told what, when and how to use their lands and how much money they will be allowed to make, then why not begin to take every person that graduates high school and tell them what they will do for the rest of their lives, it really does equate to the same thing.

RE: Face punches for all
By HoosierEngineer5 on 11/15/12, Rating: 0
RE: Face punches for all
By willj1220 on 11/15/2012 10:53:28 AM , Rating: 1
tractor that cost $5000-$7000 back 30 years ago now cost around $35,000-$50,000

Your looking at lawn tractors because tractors now cost anywhere from $238k 7280R to $405k 9560R.

And combines cost from $306k S550 to $455k S690.

And these price above are base models

Source: John Deere Website, and father (farmer for 40 years) and grandfather (farmer for 70 years)

RE: Face punches for all
By JediJeb on 11/15/2012 4:18:13 PM , Rating: 2
True on the costs, I was thinking of a small farm like my parents where a 50-60HP tractor was used. Those big ones make the price changes look even more astronomical. The fact is without any kind of exaggeration the price to run a farm operation has outpaced the income from selling the products.

I know several farmers, and whether large or small farms are involved, none are rich. They may handle huge sums of money but even those who run the largest operations would be lucky to even call themselves middle class by what they make after expenses are taken out.

"A lot of people pay zero for the cellphone ... That's what it's worth." -- Apple Chief Operating Officer Timothy Cook

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