Monday, May 19, 2014
Big Corn Versus Big Oil
Stunned by the reversal, producers of the corn-based biofuel and their supporters are now fighting back ahead of a June deadline for the Environmental Protection Agency (EPA) to make a final decision on the cut.
The clash has been portrayed as a battle between "Big Oil" and "Big Corn," two powerful and deep-pocketed lobbies. But a Reuters review of public records and interviews with lawmakers, lobbyists and executives reveals a more complex picture.
A private equity firm and an airline helped convince the Obama administration to backtrack, at least temporarily, on a policy it has supported for years: requiring steadily-rising volumes of ethanol to be blended into gasoline each year, a key to shifting U.S. energy consumption toward renewable sources.
The ethanol industry, blindsided by the proposed cut, has said it was orchestrated by "Big Oil." However, some of the most effective players in the fight weren't traditional oil majors but rather The Carlyle Group and Delta Air Lines, owners of two Philadelphia-area refiners.
Together with their allies, the refiners helped convince policymakers that the rising mandates would cripple their businesses and threaten thousands of jobs."
This discussion hit the ag media and the main stream media again this weekend. Once again, follow the money. "Big corn" doesn't have the deeper pockets of "big oil," though both have been very powerful.
Corn prices are just above half their peak in 2012. Still, we grind over 400,000 bushels of corn per day in southwest Ohio, plus feed and exports.
Margins are close on whether we will make a profit on corn or not this year, but that's the gamble. Lower your costs or get out of business.