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Inside the Beltway: "Bring on the Facts"
by Eric Washburn

While the onslaught in the urban media continues against corn ethanol, there is some good news to report: the facts are finally beginning to come out.

Governor Perry of Texas petitioned the U.S. EPA to reduce the Renewable Fuels Standard by 50 percent, and the Agency is reviewing that petition. This, and some of the allegations made by the Grocery Manufacturers Association and others, has focused Congressional and EPA attention on these issues, which is leading to a debunking of the claims of corn ethanol’s impact on greenhouse gas emissions and food prices.

With respect to greenhouse gas emissions, the EPA has released its required preliminary analysis comparing corn ethanol to petroleum. The agency concluded corn ethanol production, except for ethanol made using coal, results in significantly fewer greenhouse gas emissions than petroleum.

It also is becoming clear that the U.S. biofuels program has had little to do with higher consumer prices for food in the U.S. or around the world. Commodities like corn and wheat account for less than 20 percent of the cost of food in the marketplace – the rest is energy, packaging, transportation, labor costs, and other factors. Council of Economic Advisors Chairman Ed Lazear recently stated that biofuels use is responsible for only 2-3 percent of the rise in food prices.

Even the Los Angeles Times, a consistent critic of corn-based ethanol, stated in an editorial recently that “Despite a growing international outcry, biofuels are not a major culprit in the global food crisis. Droughts, high oil prices, commodity speculators, and the weak dollar are more to blame.”

If the RFS were repealed or reduced, as some are advocating, high oil prices today ensure that such a move would have a small effect on corn prices, but likely would substantially increase gasoline prices.

With world oil prices and gasoline prices continuing their upward march, and biofuels tempering those increases by providing roughly 5-6 percent of the total volume of U.S. light duty fuel pool, it is highly unlikely that either EPA will grant the waiver request or that Congress will revisit the new biofuels policy in the foreseeable future. In fact, Congressman Dingell, the powerful chairman of the House Energy and Commerce Committee, recently made it clear that he opposed efforts to legislatively revisit the RFS legislation.

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The American Coalition for Ethanol publishes Ethanol Today magazine each month to cover the biofuels industry�s hot topics, including cellulosic ethanol, E85, corn ethanol, food versus fuel, ethanol�s carbon footprint, E10, E15, and mid-range ethanol blends.
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