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MICHELE NORRIS, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

ROBERT SIEGEL, host:

I'm Robert Siegel.

And in this part of the program, why there is corn in your car? The ethanol explosion. In many parts of the country when you fill up at the pump, the fuel is 10 percent ethanol, alcohol made from corn. It's in there because of something that the energy act of 2005 did and something that it didn't know. What the law did was mandate that refineries increase the ethanol content of gasoline. What it didn't do was indemnify them against lawsuits claiming damage from the commonly used additive MTBE.

So in much of the country, it was out with MTBE and in with ethanol. And big money for ethanol production. Nearly 80 new ethanol plants are currently being built. Some politicians from California to New York protested that their motorists would spend more than necessary on fuel to effect a kind of farm aid. But where corn is grown, or where politicians court votes in corn country, there is a chorus of pro-ethanol voices, from President Bush -

President GEORGE W. BUSH: Ethanol is the first and most notably place where we can start,

SIEGEL: To Democrats Hillary Clinton and Barack Obama.

Senator HILLARY CLINTON (Democrat, New York): I support all kinds of ethanol infrastructure in this country.

Senator BARACK OBAMA (Democrat, Illinois): The proposal would make major headway towards building an entire infrastructure in this country.

SIEGEL: Iowa Democratic Senator Tom Harkin -

Senator TOM HARKIN (Democrat, Iowa): We need to rapidly develop technology to produce cellulose based ethanol.

SIEGEL: And Kansas Republican Senator Sam Brownback.

Senator SAM BROWNBACK (Republican, Kansas): Strong proponent, anything ethanol, I'm for it.

SIEGEL: Of the all 140 billions or so gallons of gasoline that we pump every year, overall only about two to three percent is ethanol. But that very small share represents the culmination of a very long history in the farm belt, a history that we'll hear about in a few minutes. And it represents a huge shift in our corn crop. Twenty percent of it now goes for ethanol fuel. Corn prices are up, that's obviously good news for the farmers who raise corn.

As NPR's Christopher Joyce found in Maryland, it also has a big impact on farmers who don't sell their corn for ethanol.

CHRISTOPHER JOYCE: The Delmarva Peninsula lies just inland from the swanky beach hotels along the mid-Atlantic coast. It's green and pool table flat, yet its soil has fed Americans for over 300 years.

For about 120 of those years, the Hutchison family has farmed here. They've raised soybeans and hogs and even a crop called kenaf for making paper.

Mr. ROBERT HUTCHISON: These are grain silos.

JOYCE: Right now, corn is the hot crop, and Robert Hutchison's silos are bursting.

Mr. HUTCHISON: It's just full of corn like that, shelled. Shelled corn has to be dried down to anywhere between 15 to 30 percent moisture. And then we start selling out of it January, February, March, and then we will empty our tanks about June.

JOYCE: Corn farmers like Hutchison are getting about four bucks a bushel. The corn doesn't sit in silos for long at that price. Hutchison says these high corn prices, pushed up in part by the demand for ethanol fuel, have farmers eager to buy seed.

Mr. HUTCHISON: I sell seed corn as part of my other business. Every farmer I go to is planting additional acres of corn.

JOYCE: Hutchison's a big fan of ethanol, but it also worries him and other farmers in the Delmarva Peninsula. They don't sell much corn to ethanol distilleries. They're most important customers are hog and poultry producers.

Mr. HUTCHISON: They are our number one user of grain and we need to be concerned about that, and they need to remain viable. But I do think this whole thing is going to have to shake out to a readjustment of prices and uses of grain.

JOYCE: Farmers here are happy to get record prices for corn, but they don't want to alienate the livestock producers, who are unhappy about the way ethanol is pushing up corn prices. And if those prices go too high, the livestock growers will switch to some other kind of feed. These kinds of ripple effects could reach far and wide. Pricier corn could mean pricier bacon, pricier corn flakes, pricier beer.

And an ethanol boom could have environmental costs, too. Elizabeth Marshall, an energy economist with the World Resources Institute in Washington, D.C., notes that corn uses a lot of fertilizer and a lot of herbicides. These can and have damaged rivers, lakes and especially the Chesapeake Bay along the Delmarva Peninsula. She says if the country wants more ethanol, it should help farmers find friendlier ways to grow corn and other crops in less harmful ways.

Ms. ELIZABETH MARSHALL (World Resources Institute): A lot of people are actively looking for alternative practices, including corn growers. But it's a very risky field. You can't experiment with new technologies year to year and expect to stay in business if you hit a really bad year.

JOYCE: Delmarva farmer Robert Hutchison is already taking that risk, however. Hutchison is growing a new kind of crop for the ethanol market - barley. Now, most barley has a tough seed hull that ethanol distilleries cannot handle. So Hutchison is growing an experimental hull-less barley - the hull drops off during harvest. On a bumpy ride out to his test field, Hutchison says his first job is to convince farmers to grow it.

Mr. HUTCHISON: Part of the challenge of doing this ethanol plan is we had to make sure the farmer enough additional income producing income producing ethanol out of it. That he would still net out the same, or more, as he would growing conventional barley.

JOYCE: The idea is that farmers could grow winter barley for the ethanol market and summer corn to keep the chickens and hogs fat and happy. Moreover, barley keeps soil from blowing away in the winter and sucks up excess fertilizer that might otherwise run into local waterways. Hutchison says his hull-less barley is a gamble. But the ethanol boom has helped him make more from his corn crop than he has in decades.

Mr. HUTCHISON: It's been since the '70s since I've really been able to say farming is really profitable more than you just barely earning a living and squeaking by.

JOYCE: The challenge, he says, is to find a way to keep feeding the new ethanol market without losing his old customers.

Christopher Joyce, NPR News.

SIEGEL: The ethanol boom has been a long time coming. Bill Kovarik has written a history of alcohol fuel, which he says was a popular lamp fuel as early as 1840. But during the civil war, alcohol was taxed. The target was whiskey, but alcohol fuel got caught in the crossfire.

Mr. BILL KOVARIK: And so by taxing industry alcohol with beverage alcohol, they basically put a bunch of distilleries out of business in 1860s and 1870s and opened the door for the Pennsylvania oil boom. So this was in a way a subsidy on petroleum.

SIEGEL: Which became cheaper than alcohol by comparison, and as it became more abundant it stayed that way. The Civil War tax wasn't repealed until 1906, when Theodore Roosevelt was president and no friend of the oil industry. In the early 20th century, road tests showed that alcohol was a competitive fuel. As an additive, it boosted the octane of gasoline. Alcohol mixes were used in many countries.

Henry Ford called alcohol the fuel of the future. His critics added, and it always will be. Bob Casey works at the Henry Ford Museum in Dearborn, Michigan.

Mr. BOB CASEY (Henry Ford Museum): Ford said at some point in the future, we'll run out of oil. But before that time, oil will become so expensive that we'll be looking for some alternatives. He was eighty years perhaps too early, but he was looking into the future.

SIEGEL, So Ford, like other advocates of alcohol fuels, saw this as a benefit to farmers. You might also recognize some income from stuff they were otherwise.

Mr. CASEY: He was constantly looking for ways to bring industry and Agriculture closer together.

SIEGEL: Charles Kettering of General Motors was also an alcohol booster. But his engineers figured it would take some new process using cellulose to make enough fuel.

Just a few years after the crippling tax was removed, Prohibition became the law of the land and the peddler of alternative motor fuel was maligned as the colleague of moonshiners and bootleggers. And as Bill Kovarik tells it, alcohol was dealt out of the auto fuel business in favor of another additive that boosted octane.

Mr. KOVARIK: General Motors made a deal with Standard Oil, which is now Exxon, to back away from this vision of ethanol fueled, alternative fueled America, and to go with tetraethyl lead, which was really just a bridge, originally, to the fuel of the future.

(Soundbite of newsreel)

Unidentified Man: On June 2nd, we will place a new product on the market, which will be an important milestone in motor fuel history. This new motor fuel is a challenge to all gasoline.

SEIGEL: In the 1930s, oil companies were advertising how much power their new leaded gasoline packed. There were already complaints of the toxic effects of lead, but alcohol was still on the sidelines. And as new oil fields were being discovered around the world, alcohol looked even more expensive. But during World War II, grain alcohol was mobilized along with the rest of the country.

(Soundbite of newsreel)

Unidentified Man #2: Another giant new factory to produce synthetic rubber begins to operate somewhere in the United States. Here, butadiene derived from alcohol and stored in these huge tanks is converted into a synthetic rubber.

SIEGEL: Loren Schmidt, a Nebraska farmer, remembered those synthetic rubber plants many years later. By 1971, he was a state senator, and he introduced a bill to create the Nebraska Ethanol Board.

Senator LOREN SCHMIDT (Retired, Nebraska): The purpose of the bill, as I drafted it, was to encourage the petroleum companies to remove the lead from gasoline and replace it with ethanol to improve the environment, to reduce our demand upon the foreign supplies of petroleum and to provide a new market for Nebraska-produced commodities.

SEIGEL: By the 1980s, with a jumpstart from politicians and subsidies, motorists in the farm belt were filling their tanks with a mix of oil and corn byproducts.

(Soundbite of commercial)

Unidentified Man #3: Not a decade from now, not a year from now, but now. Now, there's a motor fuel that's better than gasoline. It comes from gits and they call it gasohol.

Loren Schmidt's three aims for promoting ethanol are still cited today. But do they really check out? Tetraethyl lead is gone. Its successor additive, MTBE, is on the way out. But is it a net environmental gain? Ken Cook of the Environmental Working Group says it's a close call.

Mr. KEN COOK (Environmental Working Group): It helps us with climate change. We're producing less CO2 from ethanol than with gasoline. It definitely helps us in respect to cleaner air, but it has some environmental drawbacks, too. More soil erosion, more runoff from farm fields growing corn for ethanol plants, pretty heavy use of nitrogen fertilizer.

And so, the environmental issue, really, is something we have to watch very carefully. We don't want to reach a tipping point economically or environmentally with this technology. I'm afraid we're growing so fast that we'll reach it before we know it.

SEIGEL: Does it reduce America's dependence on foreign oil? John Felmy is chief economist for the American Petroleum Institute. The API speaks for the oil industry, which now welcomes the role of ethanol. Given the federal mandate to use it, it doesn't really have a choice. But of that role, Felmy says this.

Mr. JOHN FELMY (American Petroleum Institute): It's limited by the size of the corn crop. We've already seen corn prices go up sharply over the past couple of years as the amount of ethanol has increased in the fuel supply. So going forward, that's the real key limitation until you have the development of a new technology.

SEIGEL: But as for Nebraskan Loren Schmidt's third aim - to help farmers find a new market for their grain - the benefit, as environmentalist Ken Cook says, is unmistakable.

Mr. COOK: You really have to talk to farmers selling corn at a higher price, involved in the ethanol industry in getting money that way, to feel their enthusiasm, Robert. This is the number one hope for their future. They used to be worried about getting the next women's prison located in the county. Now, they're excited about the ethanol plant. The political momentum behind it is incredible.

SEIGEL: It is heavily subsidized, federally mandated and wildly popular on the farm. For Henry Ford's fuel of the future, the future never appeared so near.

NORRIS: And there are more stories about ethanol's pros and con, including environmental concerns, and a link to Bill Kovarik's history. You'll find that our Web site, NPR.org.

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