Conflicts of Interest

Critics often charge me with a conflict of interest for my position on grain ethanol. They suggest that I have something to gain by opposing grain ethanol. Often, a charge of bias will be the extent of my opponent’s argument, which is of course an ad hominem fallacy. While it is certainly fair to suggest that I might have a bias, at the end of the day it is the arguments that must be addressed. This is true whether I am employed by Greenpeace, or on the staff of Dick Cheney.

Furthermore, as I have pointed out, ethanol producers use a lot of natural gas, and my company sells a lot of natural gas to them. Given our market share of the natural gas business, if ethanol producers displace some gasoline by making ethanol from natural gas, there will likely be a net benefit to my company. That may change in the future if ethanol producers start turning to coal in larger numbers, but the current situation is such that increases in grain ethanol production have the potential to actually benefit my personal finances (although the trickle-down effect either way would be exceedingly small).

But consider the following hypothetical situation. Let’s say that I am a lawmaker, and I have an investment in a small oil and gas producer. Furthermore, let’s say that I sponsor and promote a bill that will increase the business prospects of small oil and gas producers in my state. Is this a conflict of interest? Is it a lapse of ethics? It would seem so to me. Now replace “oil and gas producer” with “grain ethanol producer”, and the hypothetical situation is real.

Ethanol Bill Poses Conflicts

The two lead sponsors of a bill in the Wisconsin Legislature promoting the use of ethanol and the purchase of cars that run on an 85% blend of the corn-based fuel have financial ties to the ethanol and automotive industries, records show.

State Rep. Eugene Hahn (R-Cambria) bought $20,000 in shares of United Wisconsin Grain Producers LLC under his wife’s name when the company was starting up in 2003. The Friesland-based company produces 40 million gallons of ethanol a year, and the plant is under construction to double its capacity.

“This ought to set off flashing red lights. It ought to set off warning bells for citizens,” said Mike McCabe, executive director for Wisconsin Democracy Campaign, a non-partisan organization advocating government accountability. “This is the kind of thing that has been too tolerated and has degraded our ethical climate in Wisconsin politics.

“Whenever a legislator has a personal financial stake in an industry that stands to gain from particular legislation, it raises legitimate questions about their motivation about advancing that legislation, and the public needs to be aware of that.”

Jay Heck, executive director of the Wisconsin chapter of Common Cause – a national, non-partisan, citizens lobbying group also promoting government accountability – called it a problem.

“These are definitely conflicts,” Heck said. “In the case of Hahn, he ought to divest himself of the stock in ethanol companies, or the public perception will be that he will benefit personally by passing this legislation.”

Heck said the situation was particularly problematic because Hahn and Sheridan, as the lead authors and sponsors, are actively pushing for passage of the bill. No votes have yet been cast on the bill, and a hearing has not been set.

“There is some distinction between being supportive and voting and being the lead proponents,” he said.

Hahn has made out pretty well on the deal already:

Hahn said he’s already received an 80% return on his ethanol investment.

Hahn also recently invested $2,000 in a start-up biodiesel plant, he said.

Maybe I’ll have to convert that to my wife’s name,” he said.

Hahn also voted in 2005 for a bill that would have mandated that 10% ethanol be blended into all gasoline in Wisconsin. The bill later stalled in the Senate.

Yes, convert it to your wife’s name. That should resolve those ethical issues, because clearly you would no longer have a vested interest. Politics. What a hoot.

4 thoughts on “Conflicts of Interest”

  1. Corn based ethanol is the first step in a long process. Read Buckminster Fuller’s 1982 book Critical Path. Or consider what Christopher Columbus must have said to King Ferdinand of Spain. He didn’t know there was gold when he set out to find the New World.

    Cellulosic ethanol is the future. That’s the gold that lies on our horizon. If we stay the course and keep the sails trim we’ll get there in under one year! Already huge advances are already being made at Iogen in Ottawa and at GreenField Ethanol’s plant in Tiverton, Ontario.

    And know this – corn grown to supply ethanol plants is not the same crop used to make corn flakes. And so what if Canadian farmers get paid more for their hard work in the future… I’d rather see our citizens profit more than Esso (Exxon) and Shell. Keep your money here at home and not in the pockets of the Arabs or the terrorists they fund, and keep our soldiers here at home.

    And by the way corn crops don’t require any more fuel to produce than any other crop that’s already being grown today. And with modern crop rotation farmers don’t apply that much chemical fertilizer – just nitrogen. You know, there is a reason that you nay sayers are being ignored – because you are uninformed and your ignorance perpetuates unhealthy myths that are encouraged by petroleum companies.

    read Fuel Ghoul at
    http://roberrific.typepad.com/drunkenmoose/

  2. Cellulosic ethanol is the future. That’s the gold that lies on our horizon. If we stay the course and keep the sails trim we’ll get there in under one year! Already huge advances are already being made at Iogen in Ottawa and at GreenField Ethanol’s plant in Tiverton, Ontario.

    Most proponents don’t seem to understand that this problem has been worked for 40 years. They think because the media and the venture capitalists have jumped in, that the problem is on the verge of being solved. Iogen, for instance, has been promising to build a plant in Idaho for 5 years. Why haven’t they done so? Because their process still isn’t economic. Why not? I have written on that before:

    Cellulosic Ethanol vs. Biomass Gasification

    Cellulosic Ethanol Reality Check

    And know this – corn grown to supply ethanol plants is not the same crop used to make corn flakes.

    Right. That’s why food producers have been sounding the alarm on this issue. Corn ethanol is driving up food prices. That is a fact, not some hypothetical.

    And so what if Canadian farmers get paid more for their hard work in the future… I’d rather see our citizens profit more than Esso (Exxon) and Shell.

    Shell? You mean the major backer of Iogen? And perhaps you missed the point about energy balance. Oil companies make the energy that ethanol producers are using to make their ethanol.

    And by the way corn crops don’t require any more fuel to produce than any other crop that’s already being grown today. And with modern crop rotation farmers don’t apply that much chemical fertilizer – just nitrogen.

    You are seriously misinformed. There is a major dead zone in the Gulf of Mexico, due to runoff from corn ethanol production.

    You know, there is a reason that you nay sayers are being ignored

    Ignored? I guess that’s why uber-ethanol backer Vinod Khosla has called me to make his case. Twice.

    because you are uninformed and your ignorance perpetuates unhealthy myths that are encouraged by petroleum companies.

    Well, someone is certainly misinformed. But it isn’t me.

    RR

  3. Or consider what Christopher Columbus must have said to King Ferdinand of Spain. He didn’t know there was gold when he set out to find the New World.

    Heh, that’s your analogy? You do realize that gold belonged to someone else and the Europeans stole it, don’t you? And that they killed thousands and enslaved others to get it? Hmm… then again … maybe that will turn out to be an accurate analogy for America’s quest for fuel.

  4. Robert, I enjoy reading your blog. My view on grain ethanol and E85, is that it is a first step toward getting vehicles that will run on something other than gasoline. I don’t care if that something else is methanol, ethanol, butanol or any other organic solvent that can be derived from plants.

    If we don’t subsidize a new fuel, auto makers will continue to make cars that run on gasoline only.

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