Life After VEETC

By Ron V. Lamberty | September 12, 2011

Most of those who are plugged in to the machinations of our federal government tell us it is virtually certain that the end of this year will also be the end of the Volumetric Ethanol Excise Tax Credit. How that became a political eventuality, and why elected officials would choose to have a feeding frenzy over a public policy that creates jobs, decreases reliance on foreign oil, cleans our air, reduces federal spending by more than it costs, and returns savings to taxpayers’ pockets when they buy ethanol at the pump, is probably a case for future political science and public relations textbooks. And, while debating the point at which the anti-ethanol sharks first smelled blood in the water is interesting and instructive, it is much more important now to use that knowledge to avoid any further bloodletting, and to remember that sometimes, all you can do to stop a shark is to punch it in the nose.

At the American Coalition for Ethanol’s annual meeting and ethanol conference last month, ACE Executive Director Brian Jennings summed up the VEETC battle saying, “The lesson that we all need to learn from this process is that we shouldn’t be ashamed of a tax incentive for ethanol and we damn well should not be ashamed of the [renewable fuel standard].” Jennings talked about going on the offensive against those who have created “an alternate reality about ethanol, filled with misconceptions and myths,” and reminded attendees that money “can’t change the fact that they are wrong on the issues, and it can’t change the real economic benefit that this industry, that people in this room are delivering to this country every single day.”

We need to punch some folks in the nose with those facts. We need to go on offense—telling people the truth about ethanol, and reminding people that ethanol is a real product made by real people, not some faceless monolithic government program.

In the fuel market, we need to do what we did to get E10 all over the country—show petroleum marketers how they can make more money selling our product and set their minds at ease about the problems they have been told to expect (by those who make the competing product, of course). And, we need to make their customers comfortable buying new blends of fuel such as E15, E85 or other midlevel blends.

A gasoline retailer recently told an ethanol plant board member that “it’s hard to sell ethanol when you guys don’t promote your product.” One could argue that in a market that is always driven by price (as the fuel market is) a smart promotional strategy would be fighting for a tax credit that keeps ethanol prices low. Ironically, the marketer compared ethanol to other products in the store—not gasoline. Probably because gasoline is rarely promoted—mainly because oil companies know that consumers don’t wake up in the morning thinking “YES! I get to buy fuel today!” So, it isn’t wrong to sell based on price, but it is risky to sell based ONLY on price (and it’s kind of lazy).

There is a difference between a low price and a good value. Unfortunately, we have promoted the former, and in the post-VEETC, fuel marketplace, we will have to make the case for the latter. We will have to remind refiners and tell consumers that ethanol has value in adding octane to fuel, and it increases the amount of gas a refiner can make from a barrel of oil. It keeps fuel systems clean. It cleans the air. It keeps gas lines from freezing up. Race cars use it.  It’s made in America by your neighbors, and it keeps those neighbors and your money working in the U.S. economy.

There are plenty of reasons to use ethanol. Occasionally, price will still be one of them—we need to make sure motorists know about the others.

Author: Ron Lamberty
Senior Vice President
American Coalition for Ethanol
(605) 334-3381