The ethanol era is over

Dave Juday Contributor
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For more than two decades, ethanol has been the third rail of Iowa presidential politics. John McCain famously skipped the Iowa caucus in 2000 because of his anti-ethanol position.

Times have changed. These days, support for ethanol is not the touchstone in Iowa politics it once was. In this summer’s Ames straw poll, a remarkable 84 percent of voters backed candidates who are either questioning or openly critical of current ethanol policy.

Indeed, the winner of the straw poll was ethanol critic Michele Bachmann. Bachmann opposed the 2007 Energy Independence and Security Act, which established the federal ethanol mandates, citing ethanol’s “mixed results in efficiency and costs.” Moreover, she voted against the 2008 agricultural authorization bill, saying it was “loaded with unbelievably outrageous pork for agricultural business and ethanol growers.”

To be fair, Bachmann did support state-level ethanol subsidies as a Minnesota state senator, subsidies that Tim Pawlenty started to scale back when he was Minnesota’s governor.

Pawlenty finished third in Ames, a disappointment for his campaign, which poured most of its funds into television advertisements in the run-up to the straw poll. In retrospect, that was probably a strategic blunder, as the straw poll is primarily a test of campaign organization and logistics. Though Pawlenty dropped out of the race due to his disappointing showing in Ames, there is no direct evidence that his ethanol stance was his Achilles’ heel.

Ron Paul, who’s firmly opposed to ethanol subsidies and mandates, finished second in the straw poll, while Herman Cain finished fifth. Cain’s blunt assessment on the issue: “Let’s be honest, ethanol is not going to save this country from its dependence on foreign oil.”

The new Republican frontrunner in national polls is Texas Governor Rick Perry. In 2008, Perry actually petitioned the U.S. Environmental Protection Agency for a waiver from federal ethanol mandates because the mandates were harming Texas’s livestock industry. Yet Perry received more votes as a write-in candidate in Ames than either Mitt Romney or Newt Gingrich, two of ethanol’s biggest backers. And unlike Perry, Romney and Gingrich were on the ballot.

The 2011 Ames straw poll is indicative of a paradigm shift in the impact of special-interest politics on presidential politics.

Dave Juday is a commodity market analyst in Washington, D.C., and principal of The Juday Group.