Ethanol standard debate

Brennan Stebbins

It will be a few weeks before corn plants break through the soil and fill fields across the state, but Terry Hilgedick is worried.

A farmer in Boone County, he sells his corn to ethanol plants in Missouri, where it eventually ends up in gas tanks across the state thanks to the Missouri Renewable Fuel Standard.

The standard, enacted Jan. 1, 2008, requires gasoline sold in the state to contain 10 percent ethanol, which has meant a boom in business for corn growers. But more skeptics are speaking out on the feasibility of ethanol, and Rep. Mike Dethrow (R-Alton) is calling for a sunset on Missouri’s ethanol law.

“This legislation establishes a sunset provision in the bill which says the mandate would end Dec. 31, 2010,” Dethrow said. “Those folks who support the mandate would come back, file legislation and say we need to continue the program because of whatever reasons they have. This is, in my view, a good government bill because in any mandate it’s nice to have a sunset so you can come back and review how it affects all parties involved. It keeps things accountable and it actually makes a review process so if the legislature decides to extend it for more years, they can say these are the reasons it should be extended.”

There are exemptions to the ethanol law that allow gasoline to be sold without the 10 percent blend, including whenever the wholesale price of ethanol blends exceeds the price of gasoline, when selling premium unleaded gasoline with an octane rating of at least 91 and when selling gasoline at airports.

When Missouri first considered adding ethanol to its fuel, the idea was met with fanfare from those supporting alternative fuels. Concerns about water usage in producing the fuel, increases in corn prices and worries about engine performance while using the fuel have some doubting whether ethanol is worth it.

“There are always winners and losers,” Dethrow said. “In this particular case I think of folks in my area of the state who are livestock producers who end up being the losers when you put another competitor in the competition box for feed or corn. It was originally passed by the promoters of corn ethanol that it would lower gas prices and all those sorts of things and they generally use that argument. I don’t always think at the end of the day that the economy of it is as what we thought it might be, because we’ve learned now that even though we may use the product in gasoline at the 10 percent level it also hurts fuel efficiencies.

“It’s good to put a sunset on these things and come back and talk and argue about it again to see if it has enough benefit to continue,” he added. “If not, maybe we should take the mandate off and let the free market take its course.”

Farmers take a stand

Corn farmers are stepping up in support of the original legislation. They say no sunset is needed because the Renewable Fuel Standard works.

“Consumers have seen benefits to the tune of 10’s of millions of dollars in savings at the pump since the inception of the law Jan. 1, 2008,” Hilgedick said. “The law ensures consumers that the cheapest fuel possible is what they get. The so-called mandate actually breaks the 100-year-old mandate imposed by the likes of Exxon, BP, Conoco, Chevron and Shell. Absent the renewable fuel standard oil would sell consumers their product only, exclusively without regard to the cheaper, cleaner and not to mention, Missouri-grown and Missouri-processed alternative fuel we call ethanol.”

Hilgedick disputed claims that the ethanol requirements have increased corn prices.

“Corn prices go up, corn prices go down,” he said. “It has almost no impact on the price of corn. Believe me, the surest way to drive the price of corn higher is to attack novel uses of corn.”

Hilgedick added that thousands of jobs have been created in the ethanol business around the state, and said wording in the law that exempts ethanol blends from being required if gasoline is cheaper means consumers always get the cheapest fuel possible.

“The original legislation doesn’t need to be sunsetted because it’s a good idea,” Hilgedick said. “The price trigger is working and functioning. The shifting in and out depending on the price of ethanol and the price of gasoline is a seamless change for the retailer. They’re doing it, they’re complying. The bill is working exactly as it was intended.”

If an ethanol blend was no longer required, Hilgedick said the agriculture industry could take a hit, affecting him in a big way.

“It dampens the demand for the product I produce,” he said. “Corn farmers were seeing these continued yield increases, continued technology advances allowing us to produce more and more on fewer acres and solid demand for our products is absolutely critical to us being able to continue doing it. Agriculture is the single largest industry in the state of Missouri and it’s a good industry. We need to keep it going, keep it alive.”