Ethanol Prophet Tilts at Petroleum

July 13, 2020

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by Mikkel Pates (AgWeek) South Dakota ethanol promoter Orrie D. Swayze likes to hear promotions for 30% ethanol blends in gasoline but thinks 50% would be better for the environment and human health. -- ... Swazey, 76, ... became worried about Middle Eastern oil imports, and thought ethanol made from corn might help improve U.S. energy independence. “I knew the next war would be oil, and I wanted to take it off the table,” he remembers.

As time has gone by, the U.S. has become more energy-independent. Swayze has shifted his focus on ethanol as a way to improve the environment and human health. He’s seen a parade of ethanol policies, starting in the late 1970s with federal tax incentives.

In the 1980s, federal and state subsidies helped keep ethanol in production when prices fell with crude oil and gasoline prices.

Swayze was one of a handful of South Dakota corn leaders who was dubbed by politicians of the time as a “missionary lobbyist” in his efforts to pass a “pipeline tax” (more formally, an “oil tank inspection fee”) in the mid-1980s, a sales tax on South Dakota tax on any oil imported at the pipeline.

Swayze was the founding vice president and president of the South Dakota Corn Growers Association, serving eight years in those two posts. He was an early leader in the South Dakota Corn Utilization Council. Today, he acknowledges he’s often out of step with the groups, in part because often his messages have partisan overtones.

But he says it was the policies he and allies advocated that helped lure Jeff Broin to come from Minnesota to buy a bankrupt ethanol plant at Scotland, S.D., an ethanol enterprise that became POET Inc., which is one of the major ethanol producers in the country.

They created a toehold for South Dakota to create $4 billion a year of economic input.

In 1989, Swayzee and friend Merle Anderson of Climax, Minn., were among the founding board members for the American Coalition for Ethanol, a group that lobbies for ethanol. Those pioneers dramatically would flout laws, putting E85 the 85% ethanol blend — E85 — into standard cars and driving them, even when manufacturers advised against it and if it was technically illegal.

David Hallberg of Omaha, Neb., and a Sioux Falls, S.D., native, is ethanol strategic consultant, and longtime acquaintance of Swayze. Hallberg is raising funds for a legal challenge to the Trump administration’s recent fuel efficiency rules. Hallberg and friends say the EPA downplays the harm from reduced fuel standards and ignores the efficiency and health benefits of higher ethanol blends.

Hallberg says Swayze has often been ahead of his time.

...

Swayze has witnessed or lobbied on key ethanol developments over four decades:

1976 — Led by U.S. Sens. George McGovern, D-S.D, and Bob Dole, R-Kan., the 1976 Tax Act started at 4 cents per gallon of ethanol, or 40 cents a gallon at 10% ethanol.
1979 — President Jimmy Carter started policy toward gasohol (E10) use to offset the political effect of grain export sanctions against Russia when they invaded Afghanistan. Reagan rescinded the executive order.
1990 — Clean Air Act amendments eliminated lead in gasoline and included a provision to, over time, replace ethanol would “greatest achievable extent” the carcinogenic aromatics in gasoline.
2000 — Federal government started a phase-out of MTBE as an oxygenate in gasoline because its manufactures contaminated groundwater, creating an opening for ethanol as an oxygenate.
2003 — Minnesota required gas stations to sell E10 blends of gasoline, and amended it to require the highest blend of ethanol mixes allowed by federal law. This was a harbinger.
2005 — Saudi Arabia increased oil production, crashing prices. The U.S. passed the first Renewable Fuel Standard act the same year.
2007 — Congress passed a second RFS, increasing use from 7.5 billion gallons ethanol to 15 billion, and setting even higher amounts for non-corn ethanol. The U.S. settled into “blend wall” where refiners blended ethanol to 10% ethanol for most gasoline purchased. EPA said “standard vehicles” (those that aren’t built as flex-fuel, to take 85% ethanol) weren’t proven to take more than 15% ethanol. This is despite other tests by Swayze and others and Brazilian anecdotal data. “If EPA want to prohibit E15 ... it’s their obligation to prove that it makes bad emissions. That’s what we’re going to prove in court.”
2007 — Minnesota got its first “blender pump” at Ortonville, Minn., now Border State’s Cooperative, where Swayze was on the board.
2010 — Federal tax credits for ethanol expired. Underlying this fact is that gasoline makers blend in their full amount, so they can buy RFS “credits” from those who make more than required. These described are “renewable identification numbers,” or RINs, which carry a cost. The administration has the authority to waive the requirement on a “hardship” basis. Since 2013, the EPA has grants waivers in batches, which reduces ethanol demand. READ MORE