Markets down, VEETC reform introduced

May 9, 2011

BY Susanne Retka Schill

The markets are down. Will it last? Ethanol, corn and oil markets are intertwined these days, impacted by weather, the value of the dollar, economic recovery and politics—here and in far corners of the world. Oil took a plunge last week in its biggest weekly decline in more than two years, but there was so much going on, it hardly made the news. The July contract in corn was down 70 cents last week and the spot-month ethanol contract closed nearly 17 cents lower. It is a relief to see the pressure taken off the upward trend in all those markets. The hot corn market was breathing far too much life into critic’s comments.

There was other news that barely got noticed last week. The ethanol industry’s VEETC reform was introduced in Congress.    It would phase out the blenders credit, dropping it to 20 cents in 2012, 15 cents in 2013 and become variable through 2016. If crude was $50 and below, the credit would be 30 cents. At $90 per barrel crude, it would be zero. Sponsors came from both sides of the aisle, and solidly from the Midwest: Grassley and Harkin from Iowa, Franken and Klobuchar from Minnestoa, Johanns from Nebraska, Johnson from South Dakota and Conrad from North Dakota. Now, do you think the oil lobby is going to ante up and suggest greater-than-50 percent reductions, and eventual elimination, of the oil industry’s subsidies?

Just as important was the joint press release sent out in support of the measure from the major players in the industry: RFA, Growth Energy, ACE and the National Corn Growers Association. There’s been no great fanfare announcing the new cooperative effort, but given the history, the joint press release is important. There will be no progress on legislation unless the industry has a united front.  Actually, it is the second such release. A couple of weeks ago, the group jointly responded to an event staged by ethanol critics.

Advertisement

Advertisement

Speaking of responses. In the revamping of the EPM website, we now allow comments to all stories. Ethanol critics periodically respond with predictable comments – sometimes thoughtful, sometimes error filled. We can remove obscene or irrelevant comments, but in the interest of discussion and free press, we aren’t going to remove comments just because they are critical of ethanol. It would be nice if a few more ethanol supporters would be willing to respond, and counter the negatives, or add a different, more positive perspective.

Advertisement

Advertisement

Upcoming Events

Sign up for our e-newsletter!

Advertisement

Advertisement