June 20
Ethanol refiners feel vindicated by the federal government´s response to
questions regarding biofuel´s impact on U.S. food and fuel prices.
U.S. Department of Energy Secretary Samuel W. Bodman and U.S. Department of
Agriculture Secretary Edward T. Schafer sent a letter to Sen. Jeff Bingaman,
D-N.M., chairman of the Senate Committee on Energy and Natural Resources.
The June letter addressed questions Bingaman asked the agencies the previous
month regarding the impact of biofuels on food and fuel prices.
"The food and fuel pricing issues about which you have raised questions are
complex. We would again caution, therefore, against hasty judgments driven
by highly questionable, agenda-driven calculations, some of which have been
featured prominently in the popular press," the secretaries wrote.
Biofuels have increased food prices about 3 to 4 percent, and U.S. gasoline
prices would be 20 to 35 cents higher if refiners were not blending ethanol,
they said.
"These facts from the USDA and DOE cannot be disputed," said Brian Jennings,
executive vice president of the American Coalition for Ethanol. "Ethanol
does little, if anything, to drive up the price of food, and ethanol does
indeed keep down the price of gasoline."
Biodiesel production has a negligible impact because it is tiny compared
with diesel production, they said.
Bodman and Shafer also concluded that relaxing or eliminating the federal
Renewable Fuels Standard, which mandates ethanol use, would have minimal
impact on the price of gasoline. Annual ethanol production currently is more
than 8 billion gallons, and another 6 billion gallons of capacity is under
construction. The RFS requires 12 billion gallons by 2012, which the
industry will meet under current conditions.
After 2012, the RFS could increase the price of gas appreciably, when it
requires more ethanol produced from sources other than corn, they said.
Contact Waste News senior reporter Jim Johnson at (937) 964-1289 or
jpjohnson@crain.com
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