The Corn Lobby’s Battle with Big Oil
The corn industry has always been a major player in American politics and economics, thanks to its enormous business prospects. Companies like Cargill, DuPont, Monsanto, Poet Biorefining, and Archer Daniels Midland all benefit from the vast corn industry. However, the relationship between the corn lobby and Big Oil has always been complex.
In 2013, when the Associated Press published an article exposing the “Secret, Dirty Cost of Obama’s Green Power Push,” the corn lobby criticized the media for succumbing to Big Oil’s influence. But as governments implement regulations to reduce greenhouse gas emissions, corn and oil find common ground. The reduction in traditional fuel usage threatens oil refiner profits and reduces the demand for ethanol, which is used as an additive in gasoline. This alignment has led to various lawsuits against the Environmental Protection Agency (EPA) filed jointly by the American Petroleum Institute, National Corn Growers Association, American Farm Bureau Federation, Renewable Fuels Association, and National Farmers Union.
President Biden’s higher fuel economy standards have intensified the debate between corn and oil. His administration has been supportive of ethanol, as evidenced by his 2022 speech at a Poet Biofuels building. On the other hand, former President Donald Trump has been critical of electric vehicles (EVs). The corn industry’s significance plays a role in shaping these discussions.
Ethanol’s Journey in the Automotive Industry
The use of ethanol as a car fuel and as an additive in gasoline is not a recent phenomenon. Henry Ford’s Model T in 1908 could run on ethanol since gasoline was not as prevalent at the time. Ethanol started being mixed with gasoline in the 1920s to improve octane ratings, which reduced engine knock. During World War II, ethanol use spiked as gas supplies were directed towards the military.
Ethanol Subsidies and its Impact on Greenhouse Gas Emissions
Ethanol subsidies have been in place since the Energy Policy Act of 1978. The subsidies, in the form of tax credits or direct payments, remained in effect until the end of the Volumetric Ethanol Excise Tax Credit in 2011. However, the government continued to provide incentives, grants, loan guarantees, production payments, and tax credits to support ethanol production.
Ethanol has been used to reduce greenhouse gas emissions since the 1990 Clean Air Act, which mandated increased oxygenated gasoline in areas with high ozone measurements. Ethanol and MTBE (methyl tertiary butyl ether) were popular oxygenates. However, concerns about MTBE’s environmental impact led to ethanol becoming the only legal fuel oxygenate for the US market in 2003.
The Renewable Fuels Standard (RFS) in the Energy Policy Act of 2005 further expanded the market for ethanol. The RFS requires the EPA to set a minimum volume of renewable fuels to be included in the nation’s fuel supply each year, divided into different categories of biofuels.
Corn’s Dominance in US Agriculture and the Pros and Cons
Corn is America’s largest agricultural commodity crop, and the US is the world’s largest corn grower by a significant margin. In 2023, farmers grew a record 15.3 billion bushels of corn on 86.5 million acres of land. In comparison, soybeans, the second-biggest crop, produced just 4.16 billion bushels on 82.4 million acres.
However, only 1% of corn produced is consumed as sweet corn for meals. The majority is used for products like cornmeal, high fructose corn syrup, and plastics. About 40% of field corn ends up being used for ethanol production.
The downsides of corn-based ethanol cannot be overlooked. The expansion of corn cultivation has led to the tilling of virgin prairie and conserved land, releasing substantial amounts of carbon dioxide. The excessive use of water and nitrogen fertilizers has contributed to lower water tables and dead zones in waterways, like the Gulf of Mexico. Critics have questioned the environmental benefits of corn-based ethanol, arguing that the numbers used to justify its reductions in greenhouse gas emissions are optimistic and not achievable in practice.
The Future of Corn: A Controversial Topic
The corn industry’s significance ensures that it will continue to be a hot topic in American politics and economics. The ongoing battle between the corn lobby and Big Oil, along with debates about food prices, high-fructose corn syrup, and environmental consequences, ensures that corn will remain in the spotlight for years to come.