Peterson pumped up about ethanol

OLIVIA -- The hottest word on Wall Street today is the same word that has farmers optimistic -- ethanol.

To the oil and gas industry, however, ethanol is a fighting word.

U.S. Rep. Collin Peterson said ethanol holds legitimate promise for reducing, or even eliminating the need for foreign oil -- especially from the Middle East.

"The public is behind us on this -- finally," said Peterson, who hosted a farm meeting Friday morning in Olivia. He said one lesson of the Iraq war that can be applied to energy is that America should "get the hell out of the Mideast."

Brazil does not import any foreign oil because it makes ethanol out of sugar, Peterson said. The United States could have energy independence by making ethanol from corn, he said.

The lack of E85 pumps at gas stations is the only thing that's holding the industry back, he said. E85 is a fuel blend of 85 percent ethanol and 15 percent gasoline. It can be used only by "flexible-fuel vehicles." Most major automakers produce a flex-fuel version of one or more models.

Peterson said his recent suggestion to require gas stations to install E85 pumps drew a quick, negative response from the gas industry.

He said there is a strong interest by the urban America public to have the ethanol blend of gasoline, but the gas industry is balking at putting in pumps, claiming that it costs too much. Peterson, who worked with gas stations and cooperatives in his district, said replacing premium gas pumps with E85 is a cost-effective way to make the switch. He said stations also discover they sell more E85 than they ever sold of premium gas.

Ethanol production has become so popular that new ethanol plants are a "hot investment item" on Wall Street, said Peterson. While that financial endorsement is positive for the industry, Peterson said it also means that a growing number of plants have no financial involvement by farmers.

Until recently, most ethanol plants were launched by farmer-owned cooperatives. Now, said Peterson, a growing number of plants are privately owned. Even foreigners are investing in American ethanol plants.

Peterson said he's working on a proposed policy statement that would help keep financial benefits of ethanol plants in rural America. If farmers are going to be forced to give up commodity subsidies through trade agreements, he said there should be some payoff for rural communities by maintaining local investments in ethanol plants.

He said eventually ethanol production in America will reach the point that biomass such as corn stalks and switch grass will be used instead of corn. Unlike in Brazil, he said it costs too much here to produce sugar to make that an economically viable product for ethanol.

He said reports that it takes more units of energy to produce a gallon of ethanol than what's obtained from the ethanol came from a study that was conducted by the oil companies. "I think that argument is over," said Peterson, adding that ethanol efficiency is steadily increasing.

Because of Peterson's position as the ranking member of the House Agriculture Committee, a full Agriculture Committee meeting will be held somewhere in his 7th District this summer. He said it will likely be held in Marshall.

What he's been hearing so far is that most producers like the 2002 farm bill and want to extend it, rather than have a new one written in 2007.

Given unfinished talks on international trade and subsidy issues, Peterson said most farmers want to keep the current bill. "It's working pretty good and they're happy with it," he said, adding that there is a "pretty good chance" the current bill will be extended for one to two years.

Much will depend on what happens with the next round of trade talks and if European countries lower their financial support for farmers there. If that happens, then American subsidies will likely decrease, possibly as much as 60 percent.

But Peterson said he trusts the Europeans "as far as I can throw them" and said American subsidies shouldn't be decreased until European countries implement reductions. Even if European countries make their promised cuts, their subsidies would still be two and a half times greater than American subsidies, said Peterson.

Peterson answered a variety of questions from constituents who attended the meeting Friday in Olivia. The following is a sample of the other topics.

* A proposed restriction on immigrants from Mexico was a constant concern Peterson heard from farmers during recent farm bill meetings.

"They are scared to death we're going to shut the border down and they're not going to get their crops out," said Peterson, who is advocating for a "tamper-proof" national identification card that all Americans would be required to carry as a way to solve problems with illegal immigrants. He said that proposal isn't popular but is the only way to track legal and illegal immigrants.

* Regarding education funding, Peterson said there has been progress made in obtaining additional federal funding for special education, but the current 18 percent is still a long way from the promised 40 percent. Local school districts have to make up the difference.

He said inadequate funding for the federal No Child Left Behind mandates is also causing financial problems for rural districts. He said states can seek flexibility in the requirements but Minnesota has not done so.