PA Farm News
April 26, 2008
Ethanol Industry Statement: State biofuels waiver request is the wrong course of action
SIOUX FALLS, SD -- The American Coalition for Ethanol (ACE) Friday released the following statement in response to the Texas Governor’s request to the U.S. Environmental Protection Agency for a waiver from the Renewable Fuels Standard.
Brian Jennings, Executive Vice President of ACE, stated:
“Governor Perry’s request is misguided and is not supported by the facts. Ethanol plays a minor role, if any, in food price inflation. Ethanol does play a significant role, however, in moderating the negative effects of record-high pump prices because it increases the overall supply of motor fuel.”
“Removing ethanol from the marketplace by granting the Texas waiver would not only fail to have the intended effect of reducing food prices, it would have the unintended effect of dramatically increasing pump prices and creating real, severe economic harm.”
According to Merrill Lynch analysts, oil and gas prices would be 15% higher if it was not for the availability of ethanol. At today’s pump prices, this means ethanol is a value of approximately 50 cents a gallon to American consumers.
“Moving away from ethanol at this time of skyrocketing oil prices is absolutely the wrong course of action for American consumers,” Jennings added. “Gas at $3.50 a gallon is bad enough for our already-struggling economy, and the nation is fortunate that ethanol is here today as a buffer today against even higher pump prices.”
Virginia Governor Tim Kaine has turned down a biofuels waiver request in his state, as noted in an April 15 letter (full text available at this link: http://www.ethanol.org/pdf/contentmgmt/RFS_Waiver_letter.pdf). According to Governor Kaine, an RFS waiver “would not have a meaningful impact on food prices or crop planting decisions of Virginia farmers. Virginia and the U.S. would be better served by taking actions to reduce demand for petroleum.”
ACE is confident that the EPA will recognize these facts with respect to Texas’ request. Under the federal Clean Air Act, a waiver request can only be granted if the RFS would “severely harm the economy or environment of a state, a region, or the U.S.”, or if there is an “inadequate domestic supply” of ethanol.
“Governor Perry’s rationale for the waiver request as stated in his letter to EPA Administrator Johnson clearly fails to present the data necessary to meet these criteria,” Jennings said.
EPA must issue a public notice and comment period and rule on the request within 90 days. During the comment period, ACE will remind the Agency about these facts on corn-based ethanol and food prices:
Oil costs have a much greater impact on the price of food than corn costs do, because oil is necessary to produce, harvest, process, package, and transport all food products. Since 1949 oil prices have climbed more than 4,000%, more than 10 times the increase of corn in that same timeframe.
According to research by Texas A&M University, the underlying force driving changes in the economy is higher energy costs, particularly the price of oil.
Only one-third of the corn kernel – the starch portion – is used to make ethanol, while all the protein and other nutrients are passed back to the food supply in the form of distillers grain, a feed for livestock. U.S. ethanol producers will make nearly 25 metric tons of livestock feed in the upcoming year, more than the entire feed output of countries such as Russia, Spain, and Germany.
Several factors are contributing to rising grain and food prices. In addition to oil nearing $120 a barrel, a growing middle class in China and India is desiring more protein-rich diets, weather-related disasters have shorted crop supplies, and an unprecedented amount of speculative trading in the commodities markets is creating artificially high crop prices. Any role that ethanol plays in higher prices is dwarfed by these larger, global factors.
Jennings indicated that ACE will be contacting all 50 Governors’ offices with additional factual data on ethanol, the only bright spot in the nation’s energy situation. For more information about ethanol, visit www.ethanol.org.
SIOUX FALLS, SD -- The American Coalition for Ethanol (ACE) Friday released the following statement in response to the Texas Governor’s request to the U.S. Environmental Protection Agency for a waiver from the Renewable Fuels Standard.
Brian Jennings, Executive Vice President of ACE, stated:
“Governor Perry’s request is misguided and is not supported by the facts. Ethanol plays a minor role, if any, in food price inflation. Ethanol does play a significant role, however, in moderating the negative effects of record-high pump prices because it increases the overall supply of motor fuel.”
“Removing ethanol from the marketplace by granting the Texas waiver would not only fail to have the intended effect of reducing food prices, it would have the unintended effect of dramatically increasing pump prices and creating real, severe economic harm.”
According to Merrill Lynch analysts, oil and gas prices would be 15% higher if it was not for the availability of ethanol. At today’s pump prices, this means ethanol is a value of approximately 50 cents a gallon to American consumers.
“Moving away from ethanol at this time of skyrocketing oil prices is absolutely the wrong course of action for American consumers,” Jennings added. “Gas at $3.50 a gallon is bad enough for our already-struggling economy, and the nation is fortunate that ethanol is here today as a buffer today against even higher pump prices.”
Virginia Governor Tim Kaine has turned down a biofuels waiver request in his state, as noted in an April 15 letter (full text available at this link: http://www.ethanol.org/pdf/contentmgmt/RFS_Waiver_letter.pdf). According to Governor Kaine, an RFS waiver “would not have a meaningful impact on food prices or crop planting decisions of Virginia farmers. Virginia and the U.S. would be better served by taking actions to reduce demand for petroleum.”
ACE is confident that the EPA will recognize these facts with respect to Texas’ request. Under the federal Clean Air Act, a waiver request can only be granted if the RFS would “severely harm the economy or environment of a state, a region, or the U.S.”, or if there is an “inadequate domestic supply” of ethanol.
“Governor Perry’s rationale for the waiver request as stated in his letter to EPA Administrator Johnson clearly fails to present the data necessary to meet these criteria,” Jennings said.
EPA must issue a public notice and comment period and rule on the request within 90 days. During the comment period, ACE will remind the Agency about these facts on corn-based ethanol and food prices:
Oil costs have a much greater impact on the price of food than corn costs do, because oil is necessary to produce, harvest, process, package, and transport all food products. Since 1949 oil prices have climbed more than 4,000%, more than 10 times the increase of corn in that same timeframe.
According to research by Texas A&M University, the underlying force driving changes in the economy is higher energy costs, particularly the price of oil.
Only one-third of the corn kernel – the starch portion – is used to make ethanol, while all the protein and other nutrients are passed back to the food supply in the form of distillers grain, a feed for livestock. U.S. ethanol producers will make nearly 25 metric tons of livestock feed in the upcoming year, more than the entire feed output of countries such as Russia, Spain, and Germany.
Several factors are contributing to rising grain and food prices. In addition to oil nearing $120 a barrel, a growing middle class in China and India is desiring more protein-rich diets, weather-related disasters have shorted crop supplies, and an unprecedented amount of speculative trading in the commodities markets is creating artificially high crop prices. Any role that ethanol plays in higher prices is dwarfed by these larger, global factors.
Jennings indicated that ACE will be contacting all 50 Governors’ offices with additional factual data on ethanol, the only bright spot in the nation’s energy situation. For more information about ethanol, visit www.ethanol.org.
POSTED 080426_1100 ET
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