Rising fuel costs stoke ethanol politics

updated 1:31 p.m. ET July 19, 2006

Both the Democratic and Republican candidates in Ohio say a key piece of their plans for reviving the farm economy is in alternative fuels made from the state's two top cash crops -- corn and soybeans.

South Dakota Gov. Mike Rounds, who is seeking a second term, promises to expand ethanol production. Even in Florida, where corn is hardly a major crop, two candidates for governor have suggested that tax incentives could speed up ethanol production.

The climbing gas prices and new energy regulations that have U.S. refiners clamoring for more ethanol have provided the catalyst for more investment this year in the fuel additive made from fermented corn.

The number of ethanol plants -- now at 101 -- has doubled nationally since 1999, according to the Renewable Fuels Association. There are 41 new or expanded ethanol plants under construction.

Ohio does not have any corn-based ethanol plants operating now, though there are dozens of plants in other Midwest states.

Democrat Ted Strickland wants to invest $250 million each year on developing renewable energy sources, including corn-based ethanol and biodiesel made from soybean oil.

The money would come from tax-free bonds, and both big companies and farmers would have a chance to invest it in new ethanol plants. "I would like our corn producers to become owners and operators of ethanol facilities," Strickland said.

Farmers struggling with high production costs and low commodity prices hope that new ethanol plants will help increase corn prices.

"We think it can have a tremendous impact" said Joe Logan, a northeast Ohio farmer from Kinsman who also is president of the Ohio Farmers Union. "When you look at agriculture these days, the prospect for prosperity is rather minuscule."

Republican Ken Blackwell said changes must be made to streamline the regulatory process that potential ethanol plant operators must wade through. "What you find is that it's a permit and regulatory quagmire," he said.

In Iowa, Republican Jim Nussle has put the promotion of ethanol at the top of his campaign. Democrat Chet Culver has proposed a $100 million fund to attract more private investment in renewable fuels.

"The focus of our economic development efforts will be renewable energy," Culver said at a debate in February.

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