The Ethanol Solution

Could Corn-Based Fuel Help End America's Dependence On Imported Oil?

In Detroit, they've solved the car problem by making small modifications to a standard engine's fuel-supply and injection systems. That produces the same kind of "flex-fuel" cars they've been selling in Brazil, and it doesn't cost any more than a conventional car.

Flex-fuel autos adjust automatically to whatever's put in the tank - gas, ethanol, or any combination. You can convert a standard car into a flex-fuel vehicle, but you would need a skilled mechanic and some parts to do it.

And ethanol isn't new to the auto business: the first Model T's ran on it.

"We've been working on this ethanol fuel for a long, long time," says General Motors head Rick Wagoner, who ran GM's Brazilian operations before taking over the company.

"I think what we like about ethanol, in this case is that there are things that we can really do right now. It doesn't require massive technology breakthroughs, and it does legitimately reduce the amount of oil the country has to import," says Wagoner.

Today there are about five million flex-fuel cars on American highways. A third of them were made by GM, which now is spending millions to advertise the flex-fuel cars it makes. But in the past, GM - and other automakers - have touted other kinds of alternative-fuel cars, like electric and hydrogen vehicles.

Asked if he is serious about ethanol, Wagoner says, "Fair question. The direct answer is, yes. And we've got a million and a half units on the road as we speak. We'll be producing more than 400,000 this year. So we actually think ethanol is a really good choice if we want to diversify the supply of fuels in the United States."

That ethanol would come from America's heartland, places like Steamboat Rock, Iowa, population 300. Until a year or so ago, Steamboat Rock was struggling with a stagnant farm economy, like many Corn Belt towns.

"I felt like the farming community was pretty dormant. I have a son that I would like to get back in the farm, and there just wasn't enough income to support two families," says Mark Seward, who raises corn on a farm near Steamboat Rock.

Even though there's a bumper crop most years, the price of corn stayed low. So some area farmers looked for another use for their corn.

They took a big gamble: they invested their life savings - and convinced neighbors to do the same - to build a factory that would turn corn into ethanol. 60 Minutes met with some of them recently, including Larry Meints, who is a local farmer and the chairman of the board of the Pine Lake Processing Plant.

Meints thinks some people may have thought the plan to get into ethanol production was crazy, and he admits that not all of his friends and neighbors invested in the project. But he says that was their loss. "I think most of 'em that didn't [invest] now wish they would have," he says.

That's because business is very good. The plant opened just a year ago and quickly hit maximum capacity.

Larry Hansen, a member of the plant's board of directors, says the biggest impact on the community has been that the price of corn in the area rose from five to 10 cents a bushel.

"If you've got eight million bushels coming in, all that extra money that was being sent down the river is now here in the community," says Seward, who is also on the board.

Another board member, Polly Granzow, says, "There are oil fields in Texas, and that is called their black gold. And I think Iowa, that's our green gold."