Farmers, Engineers, Contractors, Educators and Activists Call for FTC Stop to Big Oil Bid for Alcohol Fuel Market Control
       By: International Institute for Ecological Agriculture
Posted: 2009-02-24 05:01:12
International Institute for Ecological Agriculture (IIEA) announced today that its members have launched a campaign to communicate public outrage and opposition to the Valero bid to acquire the assets of bankrupted independent Ethanol producer VeraSun. IIEA executive director and renewable biofuel expert, David Blume noted that Valero's offer clearly demonstrates the end-game strategy for last year's aggressive Food vs. Fuel propaganda and price war manipulation campaign implemented by the International Oil cartel. The campaign is systematically engineering the collapse of America's fledgling independent renewable fuel and energy producers market.

In a December 2008, media alert Blume stated that the real benefactors of currently lower heat and transportation fuel prices were the major Oil companies and that, "Many investor-backed as well as entrepreneurially driven Alcohol plants currently producing in the U.S. will be forced out of business by the middle of 2009." Blume observed that "40 of the nearly 200 alcohol fuel plants we have working across the country now have been victimized by Big Oil's slash, burn, and buy strategy to collapse, consume and control our fledgling alcohol fuel industry."

Declaring bankruptcy recently in a Federal Court in Delaware, VeraSun represents a considerable setback for the Alcohol Fuel industry. Having fallen from the vanguard of ethanol producing plants funded by venture capital, its collapse is having a riptide effect through the investment and farming community as well. Once a mighty force for alcohol expansion, VeraSun is now reduced in value to pennies on the dollar.

Through a gaming of the commodities futures trading system, predicted in Blume's best-selling book Alcohol Can Be A Gas, big money influences have been able to artificially drive the price of corn up while depressing the price of alcohol fuel. The impact of artificially high corn prices, at a time of record surplus, is that plants like VeraSun (that aren't farmer-owned cooperatives, but rather investor driven businesses) are forced to pay high prices to compete with projected future market demand for corn. Meanwhile, the futures price of alcohol was driven down by Big Oil's fuel monopoly -- as collectively Big Oil buys over 99% of alcohol fuel produced.

While VeraSun and the future of other independent distillery companies face market failure, the real market losers are America's farmers. Gas today is selling for over $2.00 a gallon across the country and though considered inexpensive by some, current prices reflect a 50% increase since December 19th 2008, and even though gas prices dropped, farmers were faced with a quadrupling of prices for oil-based products such as fertilizers and pesticides.

For the first time ever the Federal court ruling in the VeraSun bankruptcy stands to set a legal precedence that would allow oil company buyers to reject contract commitments for grain and corn purchases VeraSun made with working farmers in advance of the coming year's crop.

The problem with this is, farmers have already borrowed money (based on futures pricing) to pay for higher input costs in producing the supposedly higher-priced corn. Unlike the plant owners, farmers won't get to avoid their debts and is now apparent, Oil companies are in a position to swoop in and buy up the alcohol plants, reject the futures contracts, bankrupt the farmers, and then be able to buy their land.

"If the oil companies gain control of even a quarter of the alcohol production infrastructure and land for the crops, there will be no end to the disruption they can cause in markets," Blume continued. "If you think that it's a nightmare that Big Oil controls our energy, think what life would be like if it controlled our land and food, as well."

Blume is an advocate for smaller alcohol fuel plants but feels it is imperative to protect the larger independent plants as well for the health of the U.S. economy. Along with a number of farmer, consumer and renewable energy groups, Blume is calling for the implementation policies that will ensure the alcohol fuel industry's long-term growth and stability programs include:

-- All alcohol fuel plants should be given low cost loans to install the equipment necessary to handle non-corn energy crops.

-- By 2010 plants should be required to diversify their crop inputs, limiting corn to 50% of the total.

-- By 2011 all plants should be required to run at least 90% on renewable fuel, not fossil fuels. Corn Plus has already converted its plant to run on biomass, reporting a 6:1 energy return compared to the usual 1.5:1 of coal- based alcohol fuel plants.

-- Provision of loans to provide energy to alcohol fuel plants using biomass-fired combined-heat-and-electricity facilities. This would reduce alcohol price volatility, since alcohol production would largely be decoupled from the prices of oil, coal, and natural gas.

-- An additional 50cent per gallon tax credit should be provided to plants producing less than 5 million gallons per year to encourage a diversity of alcohol plants using locally grown energy crops.
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