If there was any doubt as to the political mood of the country, President Bush's call for more renewable fuels, and ethanol production in particular, to reduce U.S. dependence on foreign oil illustrated it. The proposals, outlined in Bush's State of the Union address on Tuesday night, received applause from both sides of the aisle that was as robust as any other point he made.
The President offered the goal of blending 35 billion gals. of biofuels by 2017 (a fivefold increase from today's levels) and to reduce gasoline usage by 20%. He also proposed increasing U.S. petroleum production and doubling the size of the petroleum reserve.
On the positive side, the economic numbers continue to be surprisingly strong; the Dow Jones Average hit an all-time high on Wednesday. Meanwhile, the economy remains generally supportive to overall beef demand. Oil prices have been falling pretty sharply as OPEC has failed to restrict production, and demand has been moderate due to the overall moderate 2006-07 winter thus far.
The subsidies for ethanol are politically popular and are seen as an important offset to farm subsidies that will likely be reduced in the upcoming farm bill.
-- Troy Marshall