Anti-Ethanol Ad Sparks Outrage Among Ohio’s Corn, Ethanol Producers

Nov 11, 2015

Ohio’s corn and ethanol industry is fighting back at ads it says are misleading and funded by "big oil".

Credit Screenshot of ad "Inconvenient Facts"

The ad aired last week in Ohio, Massachusetts, New Hampshire and Vermont, and it says in part: “Mandating corn for ethanol doubles greenhouse gas emissions compared to gasoline over 30 years, and escalating mandates raise food costs and threaten the quality of the air we breathe. Mounting scientific evidence has revealed the inconvenient truth – increasing ethanol mandates can actually make things worse.”

The ad comes from the American Council for Capital Formation. It’s a conservative organization that lists Republican former Ohio Congressman Mike Oxley as an advisor. The ACCF is not required to disclose the sources of its funding, but its annual report shows major oil companies such as Exxon Mobil, ConocoPhilips, Marathon Oil and the American Petroleum Institute as sponsors. The ad is infuriating Ohio’s corn and ethanol producers, who say the ACCF is a dark money group, and that the ad is misleading, it’s based on facts taken out of context and it’s disparaging to the 40,000 jobs in the industry. Tadd Nicholson with the Ohio Corn and Wheat Growers Association said of the ads’s claims: “The corn we produce that’s turned into ethanol is renewable every single year - oil takes a million years to renew. Ethanol is an alcohol – gasoline is a poison. Ethanol saves consumers money – it simply costs less than gasoline, period.”

A letter the Ohio corn and ethanol producers sent to the ACCF says ethanol also reduces greenhouse gases, and that the Renewable Fuels Standards put in place by the federal government is responsible for $7.6 billion dollars in economic output in Ohio. The ethanol producers feel the ads are timed to the EPA’s final ruling on new RFS targets, expected at the end of the month.

The information behind the ad comes from a report from the Center for Regulatory Solutions, which regularly works with the ACCF. Chief economist Ray Keating says he stands behind the claims in the ad, and he adds that after 10 years corn ethanol mandates, he says it’s hard to find defenders of those mandates other than people in the corn ethanol industry. “My response as an economist to that is always, listen, if it makes sense, if corn ethanol provides the value and is competitive cost-wise, I’ll be the first one out front saying, ‘yay, fantastic, great.’” I love to see private sector investment innovation,” Keating said. “I’m not going to cheer on, though, an industry and businesses that are just there largely because of government subsidies and government mandates.”

But while Keating notes the ethanol industry has an economic interest in keeping the ethanol mandates in plan, the ethanol producers point out that the ACCF has an economic interest in eliminating the mandates, which they say would lead to less customer choice in the fuels market and a continued monopoly by the oil and gas industry. Mark Borer is the president of the Ohio Ethanol Producers Association, and said, “The ACCF’s list of previous supporters includes a laundry list of groups who oppose ethanol. And not surprising, many of these are gas and oil associations and companies like Exxon Mobil. So the question remains – who’s paying the ACCF for this expensive effort?”

And Nicholson with the Corn and Wheat Growers says corn ethanol doesn’t receive government subsidies, but the petroleum industry does. Keating says ethanol mandates effectively prop up that industry, but he said he’s researched the claims about subsidies for oil and gas producers. “If you look at our work, we have never argued for any kind of corporate welfare-ism, if you will,” Keating said. “Now, I know there’s a debate – I know the Obama administration keeps bringing up things, but actually most of those, if you look at them, are just kind of standard business deductions, cost of doing business.”

Keating says the Center for Regulatory Solutions gets its funding from its 100,000 members, which he says range from one-person businesses to high tech to manufacturing to energy. The ACCF plans to extend its multi-million dollar ad campaign into other states.