Facing a fierce primary challenge this year from the right, Indiana Sen. Richard Lugar found himself accused Wednesday night of driving up gas prices during an otherwise uneventful primary debate.
Indiana Treasurer Richard Mourdock, who would like to topple the long-time senator, leveled the provocative charge that Lugar's ethanol policies are driving up prices at the pump, now at $3.85 a gallon in the state.
Lugar, dean of the state's Republicans in Congress since 1977, has long been at the forefront of pro-ethanol policies, including a proposal to make sure that all cars are "flex-fuel" vehicles capable of running on ethanol. But Mourdock charged Wednesday that federal policies promoting ethanol are contributing to rising gas prices.
"Most of us, especially as Republicans, object to mandates from the federal government," Mourdock said during the debate. "And yet suddenly we saw more ethanol being mandated into our gasoline."
The federal government gave gas refiners a subsidy to add ethanol to their product, but that policy was phased out at the start of 2012. Instead, the federal government now mandates only that the industry add some sort of alternative fuel, which often means ethanol derived from corn.
Just a few years ago, Mourdock's stance would have been heresy for a candidate in a farm state. Even though the state actually farms more acres of soybeans these days, corn has long been integral to Indiana's self-image. Gov. Mitch Daniels and both the leading Democratic and Republican candidates for governor are generally supportive of ethanol. Lugar, himself a farmer, has long taken the stance that what's good for corn is good for the state.
"It's a Hoosier product, with Hoosiers producing it on farms here," Lugar replied to Mourdock with near exasperation during the debate.
But that argument has less and less support from Republicans these days. Politicians like Rick Santorum -- who told Iowans he would end ethanol subsidies and then went on to win the state -- are finding that opposing industry subsidies is less of a liability. The industry, meanwhile, believes it is finally becoming competitive on its own terms.
Mourdock, who has been endorsed by the Tea Party Express, outlines his stance as a matter of conservative principle.
That plays well with primary voters, said Gary Welsh, a Republican lawyer in Indianapolis who blogs about state politics, and who grew up growing corn and soybean crops. "Mourdock is pretty pure on those issues, and he's consistent -- even if some people may not like that view."
Plus, Welsh added, farmers are hardly monolithic in their views on ethanol. "To the extent that you're creating a demand converting food to fuel use, you're driving up food prices too, so there's that flip-side," he said. "For livestock farmers, that means their cost of feeding livestock goes up."
Mourdock may also be influenced by his work as a geologist in the oil and coal industries. The Lugar campaign has attacked him for holding up to $350,000 in stock in another alternative energy source, coal gas.
"In fact, the price of gasoline is much lower because of the addition of corn ethanol which comes from our state," Lugar told Mourdock during the debate.
A 2011 PolitiFact report on whether ethanol reduces the price of gas, found that it depends on how high the price of oil is. With high gas prices today, ethanol producers have a better argument than usual that their product actually keeps the price of gas down. But at the same time, ethanol may also drive up the prices of many food products by creating more demand for corn, and have untold environmental costs.
Steve Pittman, director of the Indiana Ethanol Producers Association, quickly jumped on Mourdock's claims about ethanol on Wednesday night. "I've never seen ethanol really go much above $3 a gallon, and right now, it's trading at $2.25. It's a low cost additive to gasoline," he said.
"I just think maybe it's a situation where (Mourdock) just didn't understand the facts," he said. "Senator Lugar understands the facts."
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