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Inside the Beltway: "The Changing Landscape"
by Eric Washburn

The economies of the United States and countries throughout the world have been thrown into turmoil as a result of the sub-prime mortgage crisis, the lack of liquidity, and now the collapse of stock prices. Retirees dependent on income from the market are struggling. Companies, including many in our industry, that rely on the ready availability of credit are in trouble. Oil prices have plunged as the world’s economies have slowed and are demanding less energy. It may take years for the economy to fully recover.

The economic slowdown is being felt in the U.S. political races. As I write in mid-October, the polls are indicating potentially seismic shifts in American politics. Democrats are poised to take 6 to 10 additional seats in the U.S. Senate and as many as 20 in the House. Senator Obama has a clear lead in the race for the presidency. Much in the way that the elections of 1994 pushed American politics to the right, 2008 is likely to push them back to the left.

This will shape the strategies that the ethanol industry will need to employ in the coming years on issues like pushing past the blend wall and extending the tax credits.

Support for ethanol remains largely bi-partisan. Core groups of legislators in the Senate – such as Senators Grassley, Johnson, Dorgan, Thune, Lugar, and Nelson – and in the House – such as Congresswoman Herseth Sandlin and Congressman Shimkus – have been instrumental in supporting pro-biofuels policies. And while their support is not expected to weaken, ethanol advocates will need to forge stronger relationships with key organizations that will be influential in this political environment.

Two constituencies in particular will play important roles in upcoming ethanol policy debates: environmental organizations and automakers. Environmental organizations will have increased influence on all biofuels policy matters, ranging from using higher blends to the tax credits to the role of ethanol in a low carbon economy. Automakers will play a major role in the decision by the U.S. Environmental Protection Agency to grant a waiver for the use of blends like E12, E15, and E20. Moreover, they will need to agree to warranty automobiles that use these blends if consumers in large numbers are expected to be willing to use these blends in non-flexible fuel vehicles.

Fortunately, as a result of successful past collaborations with these two groups, there is a strong foundation on which we can build for our common future.

 
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The American Coalition for Ethanol publishes Ethanol Today magazine each month to cover the biofuels industryís hot topics, including cellulosic ethanol, E85, corn ethanol, food versus fuel, ethanolís carbon footprint, E10, E15, and mid-range ethanol blends.
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