Obama and McCain differ sharply on ethanol

It's safe to say that ethanol isn't at the top of the minds of many voters. But for rural voters who have relied on the industry for an economic boost in recent years, it's a big issue.

Both John McCain and Barack Obama say they support ethanol production, but they disagree about whether the taxpayer subsidy should continue. When John McCain visited Iowa in 2007, he had to walk a delicate line of praising the alternative fuel but opposing taxpayer subsidies.

"When oil was $10 a barrel I did not support ethanol," he said. "When oil is $60 a barrel, I support ethanol. Chuck Grassley and I have a glass of ethanol every morning before breakfast. And I believe that ethanol now is important because of our dependence on foreign oil and also because it's a clean technology. A little straight talk, full disclosure, I do not support subsidies for ethanol. I don't think it's necessary."

McCain was harsher in his criticism of the federal subsidy a year later while campaigning in Michigan in January.

"I do not support subsidies for ethanol. I don't think it's necessary."

"I am curious as to what government program that you would cut to reduce our outrageous spending?" a voter asked.

"There are many, it's hard for me to choose," McCain answered. "The first one, maybe from a symbolic viewpoint, is subsidies for ethanol. How does that sound?"

McCain went on to say that all agriculture subsidies have to be phased out.

Democrat Barack Obama's campaign has been playing up McCain's stance on the subsidy. Obama supporters have held news conferences in rural states warning farmers about McCain's policy stance.

Dave Lazarus, who advises Obama on rural issues, said McCain has not been a consistent backer of biofuels, and has voted against subsidies in the past.

"We think there's a possibility that we'll see greater support from the agricultural community and that folks legitimately have concerns about Sen. McCain on the issue," he said.

For his part, Obama said he'll continue to be a strong supporter of the federal subsidy but wants to see greater advances in developing ethanol from other plants than corn.

"I come from a corn state, and ethanol has allowed us to put an infrastructure for alternative fuels," he said. "It has been extraordinarily helpful for the rural economy, so I'm going to support ethanol. But I want to start transitioning to cellullosic ethanol that is more energy efficient and is more likely to be really useful over the long term."

Over the past few years, there have been questions about Obama's relationship with ethanol makers.

Archer Daniels Midland, the nation's largest ethanol producer, is based in Obama's home state of Illinois. When he was first elected to the Senate, Obama reportedly received discounted fares for flying on the company's corporate jet. In 2006, he said he would end travel on all corporate jets including ADM's.

Some of Obama's advisers, including former South Dakota Sen. Tom Daschle, also have close ties to the ethanol industry.

On the campaign trail, Obama has called for an end to agriculture subsidies for large agribusinesses.

Officials with McCain's campaign say it's unfair to characterize McCain as being anti-ethanol.

Jim Mosely worked at the United States Department of Agriculture in both Bush Administrations. He is now advising McCain. Mosely said it's ridiculous for the federal government to continue the ethanol subsidy.

He said a smarter option is to offer tax credits to businesses that develop ethanol plants and develop ethanol blender pumpts. He said those proposals will increase use of biofuels across the country.

"It's those kinds of things, the tax credits that you can do, the production tax credit on renewable energies, those things can provide a more stable market and a better investment climate than just continuing to keep the subsidy," he said. "In fact, that subsidy just keeps us all hungry but it never really satisfies us."

Mosely said McCain thinks ethanol and other biofuels will play a big part in the nation's energy policy but he wants to see the fuel succeed in the marketplace.

He also said McCain supports eliminating the tariffs on importing ethanol from foreign countries. He said expanding trade across the globe will make it easier for farmers to sell their crops.

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