Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Al Gore Turns His Back on Ethanol


Is his startling admission all that startling? Or it is just confirmation that politicians are politicians are politicians?

Al Gore made headlines when, at a green energy conference in Athens yesterday, he called his support for corn-based ethanol a mistake.

"One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president," Gore said.

What may be the most newsworthy aspect of this statement is that it marks one of the few times a politician, US or otherwise, has told the un-spun truth.

According to Reuters, the International Energy Industry pegged total 2009 US ethanol subsidies at $7.7 billion.

"It is not a good policy to have these massive subsidies for first-generation (read: corn) ethanol," Gore continued.

But those subsidies happened to be roundly supported by Gore.

In 1994, as vice-president, Gore cast the deciding vote to continue ethanol tax incentives and later said, "I have not ducked when votes for ... agricultural interests were on the floor."

In 1998, at the Third Annual Farm Journal Conference, Gore announced, "I was … proud to stand up for the ethanol tax exemption when it was under attack in the Congress -- at one point, supplying a tie-breaking vote in the Senate to save it. The more we can make this home-grown fuel a successful, widely-used product, the better-off our farmers and our environment will be."
So, what to make of Gore's comment in Athens stating that "First-generation ethanol I think was a mistake" because "the energy conversion ratios are at best very small" after making corn ethanol a centerpiece of his environmental policy?

As he explained, "It's hard once such a program is put in place to deal with the lobbies that keep it going."

It is hard to "deal with the lobbies" that can make or break a political candidate.

Craig Holman, a lobbying expert with the Washington, DC consumer advocacy group Public Citizen, tells Minyanville, "I'm from Minnesota, and no one could run for statewide office in Minnesota without supporting the ethanol subsidies. Everyone's always done that even though it's inefficient and expensive."

And, as Bill Maher explained, "No one asked for corn in their gas tank… But I suppose if the first presidential primary was in Vermont, we would all be pouring maple syrup into our gas tanks."

Goldman Sachs (GS) estimates the US ethanol industry will divert 41% of the American corn crop this year, which, as Al Gore himself says, will further raise food prices at a time that can be called, at best, inopportune.

"It takes around 400 pounds of corn to make 25 gallons of ethanol," Benjamin Senauer, an applied economics professor at the University of Minnesota, said. "It's not going to be a very good diet but that's roughly enough to keep an adult person alive for a year."

However, the lobbies whose grip even the second-highest elected official in the country could not escape have put the framework in place that ensures corn ethanol isn't going anywhere anytime soon.

Here is a projection by the EPA [pdf], detailing the expected breakdown, in billions of gallons, of ethanol sources by 2022:

Switchgrass (perennial grass): 7.9
Soy biodiesel and corn oil: 1.34
Crop residues (corn stover, includes bagasse): 5.5
Woody biomass (forestry residue): 0.1
Corn ethanol: 15.0
Other (municipal solid waste (MSW)): 2.6
Animal fats and yellow grease: 0.38
Algae: 0.1
Imports: 2.2

About twice as much corn will be used for fuel than the runner-up, switchgrass, which, as far as anyone knows, people don't also eat. However, with the almost-obscene number of federal dollars involved, why wouldn't the corn lobby fight tooth-and-nail to mandate production of 15 billion gallons of corn ethanol annually?
< Previous
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos