Obama Not Hot on Ethanol So Far

(MoneyWatch)  What will be the result of an ethanol lobbying group's request to the Environmental Protection Agency to raise the ethanol blending cap for gasoline? If the brief history of President Obama's administration is any guide, the answer may be "not well". The former senator from a corn state appears to have put little energy into supporting ethanol.

That's surprising to some. While still an Illinois senator, Obama almost always voted in line with the corn lobby. One expectation held for his presidency was that he would continue his efforts to push ethanol, because supporting the fuel directly feeds the corn industry -- so far, corn is the only feedstock used to make significant amounts of ethanol, at least in this country.

Those votes are beginning to look like mere political expedience. Pay attention to any of Obama's speeches, and you're likely to hear a call for the country to get off its oil addiction. But that appears to be a call to the future, while in the present the corn ethanol industry teeters, with one major producer, Verasun, already having declared bankruptcy and another, Pacific Ethanol, not far behind.

Of course, it's easy to argue that ethanol doesn't deserve special recognition. Almost every industry is suffering right now, and none of the individual ethanol companies has become large enough to significantly damage the economy if it closes, unlike the automakers. Yet a precedent for supporting ethanol was set during President Bush's two terms. Further, putting money toward ethanol would almost certainly have met the "shovel ready" requirement of the stimulus, quickly creating (or saving) some jobs.

The stimulus itself is the main exhibit of corn ethanol's plight under Obama. Take a look at this simplified version of the renewable energy provisions in the stimulus. Biofuels don't make an appearance.

What I've seen so far suggests that Obama, no longer dependent on a single lobby, has swung heavily toward a science- and merit-based approach. Energy efficiency, which as recently as last year was declared the red-headed stepsister of renewables, doomed to be ignored because it's not as "sexy" as solar panels or electric cars, has taken center stage. Meanwhile, measures that make little sense -- corn ethanol is questionable -- have been pushed to the side.

So the verdict on ethanol mixes? It will likely come down to the reception by automakers and other groups, which is so far tepid at best. The EPA has less than a year to decide -- which may result in it choosing to turn the measure down, for now.