Ethanol Politics

DES MOINES (DTN) -- It may be tempting to look at $45 oil, falling gasoline demand and congressional pressure to reform or repeal the Renewable Fuels Standard as signs ethanol is losing its political luster. But one former Republican senator and presidential candidate wasn't taking any chances, using a speaking engagement at the Iowa Renewable Fuels Association summit in Altoona, Iowa, Tuesday to call out other potential 2016 Republican presidential candidates for snubbing an invitation.

Rick Santorum, former U.S. senator, 2012 Republican presidential candidate and potential 2016 presidential candidate, took a swipe at a group of potential candidates who were in Iowa this week for Rep. Steve King's "Iowa Freedom Summit," but declined IRFA's outreach.

Though Santorum won the 2012 Iowa caucus, hasn't officially decided whether to make a 2016 presidential run and is a latecomer to supporting the RFS, he told an audience of ethanol and biodiesel producers he continues to support biofuels and questioned where other Republican candidates stand.

Anyone who believes Iowa ethanol politics has lost its appeal when it comes to presidential races may take notice as Santorum seemed to be planting an early flag in the heart of biofuels country. President Barack Obama won the 2008 Iowa caucus based largely on his support of ethanol in particular and biofuels in general. Just last week, Iowa Gov. Terry Branstad launched the "America's Renewable Future" campaign to promote the RFS in the 2016 Iowa caucus.

Though Santorum continued to mistakenly refer to the RFS as the "RFF" throughout his speech, he made it clear ethanol and other biofuels should be on the lips of candidates who are serious about winning in Iowa. He said he believes expansion of biofuels production is an important component of keeping energy prices lower.

"Look at the impact of lower energy prices and how it improves everyone's outlook," Santorum said. "...When you lower the cost of energy, people feel optimistic. People don't realize the tremendous importance of agriculture in our country. Those who want to run for higher office should talk about these issues."

Santorum, who is considered to be a long shot to repeat as winner of the Iowa caucus, said he originally did not support the need for both the ethanol blenders credit and RFS during his tenure on the Senate Committee on Agriculture that ended in 2007. Now, he said, he will speak up against the "myths" perpetuated about biofuels.

"This particular area has been a leading edge in technology growth in agriculture," Santorum said. "There are myths and a lot of misinformation about this industry. You have a tremendous opportunity in the renewable fuels industry. I find it a little remarkable that every person here over the weekend was invited to come and I'm the only one here."

U.S. Navy Rear Admiral Len Hering, said the renewable fuels industry "provides an opportunity to be energy independent." He said politicians continue to talk about energy independence, "but are in the way." Hering was critical of Santorum for serving 10 years on the Senate Ag Committee but only recently coming on board in support of ethanol and other biofuels.

Those in attendance at the IRFA summit continued to question why EPA delayed the release of the final 2014 and futures years' RFS, asking for someone to read the tea leaves about when the agency will finalize the RFS and what the final RFS volumes will be. EPA has stated publicly it intends to finish RFS volumes for 2014 to 2016 this year.

Former U.S. Sen. Byron Dorgan, D-N.D., the author of the 2005 RFS, said although the law has worked as originally intended, "we don't celebrate our successes.

"...We went from almost nothing to 14 billion gallons of ethanol in a very short amount of time," he said. "I'm disappointed with the White House and the administration. This is not difficult for the administration to do. This president has said he supports biofuels. We could and should expect better. All of us are pretty frustrated. We have a new group in Congress and they don't like mandates of any kind. It's important for us to start being a bit more noisy on this."

SHALE FUTURE

Gen. Wesley Clark, chairman of Growth Energy, said although the current production boom from shale oil is part of the reason world oil prices have come down, biofuels will be needed to establish long-term energy security.

"We're not going to become energy independent on shale oil alone," he said. "I'm talking about not importing liquid fuel. It starts here in Iowa because you're the center of the RFS. All we need is to be turned loose in a free marketplace."

Wesley said he recently read a comment from a possible presidential candidate who said they didn't support government mandates to spark biofuels markets.

"Then you tell me why gasoline has to be 90% of the fuel pool," Wesley said. "Where we want to sell it is here and we're blocked by the E10 blend wall. This is like running on wet sand on the beach." The U.S. should cut oil imports and replace it with homegrown biofuels, he said. That would restart the economy.

Oil prices likely will rise again in the coming year, he said. Because Saudi Arabia decided to maintain current production levels amid expanding U.S. shale oil production, he said oil prices dropped from more than $100 a barrel to less than $50 with a glut of supply.

"Twelve months from today, U.S. production should be a lot less because shale wells decline production by 70% to 90% in the first year, and [with] growing demand for oil throughout the world, the price of oil will rise again," Wesley said. "One thing can be sure, world demand for oil will increase, barring big world events. What this means is America needs us and the world needs us."

ETHANOL POLITICS

Catharine Ransom, ethanol lobbyist with Glover Park Group in Washington, D.C., said 2015 could be a consequential year for the future of biofuels -- even before the 2016 presidential campaign kicks into high gear.

"Largely due to your industry, the RFS and this sector enjoy bipartisan support," she said, although there continues to be opposition in Washington. In the early going in the new Republican-led Congress, Ransom said it appears there will be an "active legislative environment."

For example, during the current ongoing debate on proposed Senate legislation to build the Keystone XL pipeline, a recent amendment was unsuccessfully offered to eliminate corn ethanol from the RFS. "This is going to continue time and time again," Ransom said. "This is not the only time when there will be a lack of clarity with amendments. We can expect this to continue the next two years."

Ransom said she expects to see broader energy legislation come up for a vote in Congress at some point.

"Many bills will be coming up where there will be an opportunity to attach amendments," she said. "In 2007 the biofuels sector experienced a moment where all the stars aligned with concerns about the price of oil and so on. That kind of a moment doesn't happen twice. What we have with the RFS is good. This is a year of action. Everyone who cares about this issue needs to let it be known how important this issue is."

Ransom said although EPA's decision to delay a proposal that would have cut mandated biofuels volumes by about 3 billion gallons across the board was an acknowledgement of a "bad proposal to begin with," there is uncertainty about what it means for any final RFS.

Amanda DeJong, senior policy adviser with the Iowa Corn Growers Association, said the Senate is likely to vote on an RFS reform bill this year. "I think we'll be able to protect that in the Senate," she said, although chances would be better to turn back complete repeal of the RFS as biofuels continue to have bipartisan support.

Iowa Agriculture Secretary Bill Northey said Iowa biofuels producers and farmers have an opportunity to share their story during the next presidential campaign.

"Big oil companies -- we've got their attention," he said. "That means there's a battle... We're at one of those turning points again. We see folks who take old arguments and make them new again. We have to continue to challenge that. When we have a presidential candidate tromping through the state, we need to ask them where they stand on renewable fuels... We need candidates to understand. We need them to advocate for the RFS. I think we have a good story. Make sure to talk to folks."

Todd Neeley can be reached at todd.neeley@dtn.com

Follow Todd on Twitter @toddneeleyDTN

(AG/CZ)

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