Is Ethanol Still A Political Giant In Wake Of Cruz’s Iowa Win?

Feb 6, 2016

    

  After Texas Sen. Ted Cruz’s victory in the Iowa Caucuses many are questioning the political importance of ethanol, an industry that has long held sway in the political scene of Iowa and much of the Midwest.

Iowa is the top-producer of ethanol, the corn-based fuel, in the country. With its status as the first state that gets a crack at the presidential contest, Iowa often brings renewable fuels into the political limelight.

Support for government supports of the ethanol industry has been considered critical to wooing Iowa voters. The 2016 campaign, however, proved different.

The ethanol industry spent millions of dollars against Cruz, largely because he does not support the Renewable Fuel Standard (RFS), the federal requirement to blend ethanol into the nation’s gasoline supply. From a blitz of ad spending to campaign talking points, ethanol was in the campaign news cycle.

Biofuels policy gave Donald Trump, Cruz’s chief rival in the Iowa polls, for instance, plenty of ammunition against Cruz during campaign stops.

“So the oil people are funding him and they don’t want ethanol,” Trump said at a January campaign stop. “Your ethanol business if Ted Cruz gets in will be wiped out within 6 months to a year. It’s going to be gone.”

Still, Cruz emerged from Iowa with a win in the polls, 28 percent of the caucus vote and eight delegates to the Republican National Convention.

For his part, Cruz told Iowa Public Radio late last year that he favors getting rid of all energy subsidies and mandates.

“I don’t think we should have Washington picking winners and losers,” Cruz said. “That when you have politicians putting in place a mandate, what it ends up doing is empowering those politicians. And so I believe we should phase out the ethanol mandate and I’ve introduced legislation to do that.”

In the end, 12 of the 14 candidates in the Republican field supported the RFS. All twelve lost to Cruz. While that may damper ethanol’s hold on politics in Hawkeye State, it doesn’t sound its death-knell as a political issue.

Despite Cruz’s caucus victory, Iowa’s Republican governor, Terry Branstad, seems to think that ethanol remains a political heavyweight in his state.

“Unless he changes his position on renewable energy,” Branstad said, “I don’t think he has much of a chance to win here in a general election.”

Branstad didn’t endorse a candidate in the Republican field, but campaigned against Cruz and his lack of support for ethanol.

Most presidential candidates still don’t want to take on ethanol, says Tim Cheung, an analyst with ClearView Energy Partners.

“The top-10 corn producing states in the country were responsible for about 100 electoral votes, or more than one-third of the vote you need to take the White House,” Cheung said. “So in that context, we don’t think its position across the country has changed just because of [the Iowa Republican Caucuses.]”

It’s clear now that a lack of support for the ethanol industry won’t necessarily lose a candidate the Iowa Republican Caucuses. What’s less clear is what that means for Midwest corn and soybean producers that have depended on the ethanol industry to buoy farm prices.