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The Ethanol Scammers Rent a General

by ROBERT BRYCE

The ethanol scammers have no shame. None. And neither does the ethanol industry’s new hired gun, General Wesley Clark.

Last week, the EPA announced that it was considering raising the volume of ethanol that could be blended into gasoline from the current limit of 10% to as much as 15%. The agency is reacting to a petition from the pro-ethanol trade group, Growth Energy, a recently formed group that has hired Clark to be its spokes-general. More on Clark in a moment.

There’s plenty of opposition to Growth Energy’s proposal. Among the biggest opponents are the automakers. The problem is obvious: automobile warranties could be voided and cars could be damaged by the higher ethanol blends. There are about 250 million motor vehicles in the US and of those, fewer than 10 million have been built to handle blends greater than 10% ethanol.

The Wall Street Journal summed up the problem well in an April 17 article, when it said that consumers who use gasoline blends containing more than 10% ethanol:

could get stuck paying the bills if there’s damage to fuel lines or other components unless auto makers agree to shoulder the costs. Auto makers offer so-called flex-fuel vehicles designed to accept up to 85% ethanol fuels. But many current and older model cars aren’t designed for ethanol concentrations above 10%. Alan Adler, a spokesman for General Motors Corp., said if the EPA allows higher ethanol blends “we want to be sure that we’re not on the hook for vehicles” that end up having problems with higher blends.

That’s the key. No one wants to be “on the hook” for the damage caused by the ethanol scam. And the evidence shows that ethanol – even at 10% blend volumes — is already damaging vehicles. In January, Toyota announced that it was recalling 214,570 Lexus vehicles. The reason for the recall: The company found that “ethanol fuels with a low moisture content will corrode the internal surface of the fuel rails.” Toyota didn’t disclose how much the recall would cost.

But Clark and his backers are facing organized resistance. And lots of it. On March 26, a letter from one of the oddest coalitions  in modern American history was sent to Energy Secretary Steven Chu, Agriculture Secretary Thomas Vilsack, EPA Administrator Lisa Jackson and Obama’s advisor on climate change, Carol Browner. The coalition advised that it “opposes any administrative or legislative efforts to increase the current cap on the amount of ethanol permitted to be blended into gasoline” until “comprehensive testing programs” have been done. The signatories included, among others, the Sierra Club, National Petrochemical and Refiners Association, Competitive Enterprise Institute, Grocery Manufacturers Association, Friends of the Earth, and the Association of International Automobile Manufacturers. (Read the letter here: http://www.npradc.org/)

I was alerted to the letter by Frank O’Donnell, president of Washington-based Clear Air Watch. During an interview last week he told me, “I’ve never seen the Sierra Club, the Competitive Enterprise Institute and the oil industry on same page in my life.” O’Donnell believes that increased ethanol use will be bad for air quality. Beyond that issue, he said “There’s reason to be concerned that higher ethanol blends will be bad for consumers. Not that much objective study has been done on higher blends of ethanol on engines, lawn mowers, boats” and other consumer products.

So why does the ethanol industry need to move past the 10% limit on blending? In industry parlance, the ethanol producers are hitting the “blend wall.” That is, they have way too much capacity and motorists aren’t buying enough gasoline to absorb all the ethanol they are producing. That leaves them with two options: close more distilleries or force more ethanol into motorists’ fuel tanks. And that’s where Growth Energy’s rent-a-general strategy comes in.

On February 5, Growth Energy announced that Clark will be the group’s co-chairman. And it trumpeted the fact that Clark is “one of the most highly decorated military leaders since General Dwight D. Eisenhower.” Decorated or not, Clark’s job is to help convince federal regulators that increasing the blend volume is a good idea. And in theory, Clark should lend some class to the  ethanol scammers. He’s a retired four-star general who graduated first in his class from his class at West Point. He served as Supreme Allied Commander of NATO. In 2004, he ran for president as a Democrat but quit the race after racking up a single primary win: Oklahoma.

Clark has declared that moving to 15% ethanol will stimulate the US economy and create 136,000 jobs. He has even claimed – perhaps with a straight face – that US farmers are “the original free market people in America.”

That claim would be amusing if it weren’t so absurd.

Jeff Broin, the CEO of POET, a South-Dakota-based ethanol producer and one of the backers of Growth Energy, told the Journal that if the ethanol blend volume isn’t raised to 15%, “without question grain supplies are going to grow and the next group looking for a bailout will be the American farmer.”

Thus, while Clark is claiming that farmers are the original free market types, his pals in the industry are saying just the opposite, that they need more taxpayer dollars. And therein lies just one of the many outrages of  the ethanol scam: Today, the ethanol industry is in a financial crisis. Despite years of huge subsidies and mandates, they can’t make a profit. (One analyst quoted cited by the Journal estimated that some distilleries are losing $0.10 on every gallon of ethanol they produce.) And yet the only solution that the scammers can find for their predicament? Yep, you guessed it, more subsidies and mandates.

The scammers are pushing for more ethanol consumption at the exact same time that new reports are showing the huge environmental costs of their favorite fuel. On April 2, an international team of 75 scientists from 21 countries released a report which determined that “the water requirements of biofuel-derived energy are 70 to 400 times larger than other energy sources such as fossil fuels, wind or solar.”

Of course, the water problem is just one of many deleterious effects of the ethanol scam. And for a few pieces of silver, Clark has chosen to ignore all of those problems. Back in February, Growth Energy said that Clark will lead the group “as it works to increase American energy independence.”

Good luck with that, General.

ROBERT BRYCE’s latest book is Gusher of Lies: The Dangerous Delusions of “Energy Independence” which just came out in paperback.

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