Lobbyists Fight to Revive Corn Ethanol's Fortunes

Another day, another dollar ... lost. The end result of ethanol giant Verasun's bankruptcy proceedings is that the producer will sell off its plants and other assets, some in auctions with no floor price. One gets the feeling they may go for substantially less than they cost to build.

But there's no indication that the corn ethanol tide is falling, either. Many familiar battles continue to be fought. Yesterday, the Washington Times reported that ethanol lobbyists are gearing up to fight for national rules limiting the amount of ethanol mixed with gasoline to be raised from 10 percent to 15 percent. According to the lobbyists, industry setbacks like Verasun haven't hampered ethanol's growth, so the cap needs to be lifted to account for both current capacity and future growth.

Some politicians aren't buying the argument. In Missouri, Sen. Matt Bartle is even arguing that the state's existing 10 percent mandate should be repealed.

And in another blow for ethanol advocates, a damaging report from the University of Minnesota was just released. The study claims to comprehensively factor in climate and health costs, coming up with the conclusion that corn ethanol is a worse fuel than regular gasoline.

NYT's Dot Earth notes that the researchers behind the Minnesota report claim that their study examines more factors than another recent report from the University of Nebraska. Nevertheless, the Renewable Fuels Association, ethanol's lobbying organization, quickly hit back with the accusation that the Minnesota study relies on "insufficient and extremely uncertain analysis of potential land use change." The response in full is here.

Meanwhile, if you thought that all the battle lines had already been drawn in the corn ethanol fight, you aren't quite right. Former NATO commander Wesley Clark has signed up with yet another ethanol lobbying organization called Growth Energy, this one intended to fight the accusation that the fuel raises food prices.

Of course, none of this movement will do much for ethanol if oil prices continue to drop. Crude prices fell to near $40 a barrel today. The lobbyists might be best served by dropping their arguments and instead praying that the predictions of higher oil prices from earlier this year come true after all.