The Campaign Spot

Will Ethanol Be a Driving Issue in Indiana’s GOP Senate Primary?

Indiana senator Richard Lugar, facing a tough primary challenge from Richard Mourdock, knows the ground he wants to fight on:

“I wish there were many more (farmers) in Indiana,” Lugar, who owns a 640-acre farm in Marion County, told The Star Press. “I wish the primary were held among farmers. We would do abnormally well.”

Lugar says he hasn’t heard challenger Richard Mourdock mention agriculture at all during the campaign, except when he “somehow or other came out against ethanol” during a recent debate.

“I can’t believe it,” Lugar said, laughing. “I have fought for 15 years to get these (ethanol) refineries built, to get demand for our Hoosier crop. Thirty to 40 percent of our (corn) crop goes to ethanol. Somebody who doesn’t understand that doesn’t understand Indiana agriculture. This is our bread and butter, and greater energy independence. We displaced 6 to 7 percent of imported oil that comes from ethanol grown right here in Indiana.”

Mourdock called for an end to ethanol subsidies in the candidates’ lone debate.

But if ethanol isn’t the big issue it used to be in the Iowa Republican caucus, is it still a driving issue in Indiana Republican circles?

In the past, ethanol was a hot topic in the Iowa caucuses, but in 2011, most of the GOP field came out against ethanol subsidies and greater numbers of Iowans seem to agree with them as larger, more pressing issues such as the economy and the budget take over.

“It’s an issue I think Iowans are mindful of, but with the economy and everything else like that, there are other issues that they’re more focused on,” said Craig Robinson, formerly political director for the state Republican Party and editor of The Iowa Republican.

At the end of last year, the Washington Post noted that the ethanol industry was doing fine, even as various subsidies were set to expire:

Meanwhile, the ethanol tax credit, worth $6 billion per year, is set to expire this Sunday with nary a whimper from Congress. Ethanol’s defenders couldn’t surmount the combination of recent bad press for corn- and soy-based fuels — as it turns out, they can wreak havoc on the environment and cause food prices to spike — or the anti-subsidy mood in Washington. So what happens to ethanol now?

First off, the ethanol industry as a whole will likely survive just fine. Just ask the ethanol producers themselves. There’s a reason why they quietly relented on trying to extend the 45-cent-per-gallon volumetric excise credit this year. After 30 years of subsidies, the industry is thriving. Oil prices remain high, making ethanol more competitive. The EPA’s Renewable Fuel Standard is still in place, which mandates that transportation fuel blend in a certain amount of ethanol, a form of government that’s arguably even more valuable than the tax credit. And U.S. exports of ethanol hit a record high in 2011, with some one billion gallons shipped abroad.

But in Indiana’s gubernatorial race this year, both sides are attempting to showcase how pro-ethanol they are:

Democratic gubernatorial candidate John Gregg and Republican candidate Mike Pence split an hour on stage at the Indiana Ethanol Forum Tuesday saying they want an all-encompassing energy plan and more fuel choices.Greg Noble with the Corn Marketing Council said funding is the reason why more ethanol pumps aren’t readily available in Indiana.

“Why is it talking so long to get those pumps available? Well, it’s major funding. It’s a pretty healthy investment for retailers to upgrade their pump infrastructure to meet the specifications. Ethanol does take a little bit of a different pump as far as United Laboratories’ approval process in order to dispense ethanol-blended fuels,” Noble said.

Indiana can produce more than 1.1 billion gallons of ethanol a year.

The industry employs more than 3,500 Hoosiers, and agricultural economists said it’s responsible for a boom in farm production and farmland values, RTV6′s Norman Cox reported.

That figure of 3,500 Indiana residents employed in the ethanol industry seems surprisingly low. For perspective, 550,369 votes were cast in the 2010 Indiana GOP Senate primary.

The editors of NR endorsed Mourdock April 16. The primary is May 8.

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