Ethanol Battles: What Does Iowa Have to Do With the Ambassador to Brazil?

Farm-state congressmen clearly have lots of influence over domestic policy—especially energy. But foreign policy? Ditto, as it turns out, especially when it comes to energy.

Iowa’s Republican Sen. Chuck Grassley is holding up the nomination of Thomas Shannon to become ambassador to Brazil. The problem? Mr. Shannon has hinted he’s in favor of repealing the $0.54 cent-per-gallon tariff the U.S. levies on imports of Brazilian sugar-cane ethanol—a direct threat to the farm-state interests Mr. Grassley represents.

“I ask that you clarify the policy of the Administration regarding the ethanol tariff […] Mr. Shannon’s statement has caused concern among domestic biofuels producers who are now left to wonder if President Obama supports repealing the import tariff,” Mr. Grassley wrote yesterday in a letter to Secretary of State Hillary Clinton and U.S. trade representative Ron Kirk.

That all came about after Mr. Shannon said in his Senate confirmation hearing earlier this month that removing the tariff would be “beneficial.”

If it sounds familiar, it should. Last summer, when gasoline prices hit $4 a gallon, several high-ranking senators, including Richard Lugar of Indiana and Dianne Feinstein of California, came out in favor of scrapping the tariff in order to save U.S. drivers a few cents at the pump. Brazilian ethanol—even with the tariff—is cheaper than U.S. corn-based ethanol, which is blended with gasoline.

Most senators, especially in the corn belt and led by Mr. Grassley, heartily opposed the idea. Candidate Obama, too, was opposed—he hails from Illinois.

But the spat over ethanol tariffs revives an old question—what’s the priority behind U.S. energy policy, if there is one?

For Mr. Grassley, protecting U.S. biofuels producers means more energy security and fewer imports. For many environmentalists, Brazilian ethanol is preferable: It is made from sugarcane and according to most scientific studies has a more benign environmental footprint than U.S. ethanol. And for most U.S. drivers, the main concern is simply keeping pump prices in check.

The administration’s response might shed light on just where its priorities lie.

UPDATE: The Des Moines Register apparently had the goods last night, with a statement from the Obama administration: “Regarding the U.S. tariff on Brazilian ethanol, the administration has no plans to change it.”