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U.S. energy needs more direction

BISMARCK, N.D. -- High corn prices and low ethanol demand have put a crimp in the flow of product and profits from an industry still mostly in the research and experiment stage. The question has become, "can the present generation of ethanol oper...

BISMARCK, N.D. -- High corn prices and low ethanol demand have put a crimp in the flow of product and profits from an industry still mostly in the research and experiment stage. The question has become, "can the present generation of ethanol operations weather the storm?" Time has become an issue.

North Dakota Gov. John Hoeven has been pushing the Environmental Protection Agency to move quickly to decide whether to increase ethanol levels in gasoline to 15 percent. Wearing his hat as chairman of the Governors' Biofuels Coalition, Hoeven would like to see the percentage of ethanol in gasoline kicked up to increase demand.

Ethanol operations around the country have been hurting. They were blindsided by low gasoline prices and high corn prices, making ethanol mixes less attractive for motorists. Estimates are that more than 20 percent of the U.S. ethanol production has been shut down.

Hoeven's push has serious practical motivations. North Dakota's ethanol producers are hurting just like those in other states. Red Trail Ethanol of Richardton, N.D., recently published its annual report showing a $5.4 million loss last year. That's a heady hit for a relative new company.

North Dakota farmers and ethanol operators need to look seriously at whether corn-based ethanol is the right kind of value-added agriculture for the state.

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The ethanol industry in North Dakota is a good idea, with one significant caveat, that reliance on corn as a source for ethanol must give way to switch grass, wood chips, cane or other sources. Ethanol cannot afford to be pegged to the price of corn, a significant food source. Subsidies of corn-based ethanol can only be justified as carrying the industry through a transition to cellulose-based ethanol. That the push must come along with research and development of these ethanol sources.

The switch to a 15 percent ethanol mix is probably inevitable, if not now, then in the near future. That being the case, EPA ought to grant the increase. But that should not be done without a powerful effort to force research and development forward on cellulose-based ethanol. We need to get off corn.

The U.S. continues to wander the desert aimlessly on energy policy. The Obama administration must form a coherent energy policy, one that makes sense for coal and oil, wind, solar, nuclear and ethanol. Each energy source must support the other in its own way, always with the economy and environment in mind. How much longer do we have to wait?

The ethanol plants are a creature of federal public policy. And the federal government, therefore, has a responsibility to finish the job.

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