Food For Fuel Policy Doesn’t Make Sense
Continuing to push the federal ethanol policy — using food for fuel — in the face of food shortages across the state, nation and world should leave a bad taste in the mouths of lawmakers.
That’s why Gov. Rick Perry and U.S. Sen. Kay Bailey Hutchison should be applauded for their recent proposals to amend that policy, says Kathleen Hartnett White of the Texas Public Policy Foundation.
“A growing mountain of evidence reveals the economic and environmental folly of federal ethanol policy,” she says. “Gov. Perry’s requested 50 percent waiver and Sen. Hutchison’s proposed freeze on the renewable fuel standard (RFS) would alleviate the pressure on corn for fuel.”
Flawed federal policies are having an increasingly visible impact on food prices.
“Texas is only beginning to see the rising food prices that federal ethanol policy could generate,” Ms. White says. “Last year’s more than 4 percent rise in food prices stems from the 2005 Energy Policy Act. New energy law enacted in 2007 significantly enlarged the RFS. Food prices may increase as much as 8 percent this year. And consider where the largest price increases occurred.”
Those increases are seen in the grocery bills of consumers.
“The retail price of eggs increased 29 percent last year; cereal products, 6.5 percent; sweetened beverages, 4.5 percent; beef, 4.4 percent,” Ms. White reports. “All depend on corn-based ingredients or corn feed grains. One-fourth of the 2007 U.S. corn crop was converted to ethanol; the U.S. Department of Agriculture (USDA) projects that 30-35 percent of this year’s crop will become ethanol.”
And without a change in policy, it’s going to get worse.
“New energy laws will force more corn to become fuel,” Ms. White says. “Meeting the 36-billion-gallon RFS mandate in 2022 will require 115 percent of last year’s U.S. corn crop.”
But Texas is the appropriate state to lead the charge for change in bad ethanol policies.
“The indirect costs of ethanol hurt Texans in the grocery store as well as key agricultural sectors of the state economy,” Ms. White contends. “All animal agriculture – beef cattle, dairy, swine, and poultry – uses corn-based feed grains. “Four years ago — before the RFS — corn cost $2 per bushel; last year, it was $4. As Gov. Perry’s letter to the U.S. Environment Protection Agency highlights, these higher corn prices cost the Texas economy at least $1.17 billion.”
And there’s evidence that we simply can’t use so much ethanol.
“The U.S. fuel supply may not be able to absorb the mandated volumes of ethanol,” Ms. White says. “Most of the approximately 240 million US vehicles cannot use gasoline with more than a 10 percent ethanol blend.”
Using food for fuel won’t achieve the policy’s stated aims, she adds.
“Ethanol is an ineffective means of reducing reliance on imported oil,” Ms. White says. “While domestic production of ethanol doubled between 2003 and 2007, imports of oil and refined gasoline increased. A deficit in refining capacity and an approaching surfeit of ethanol production capacity will not increase the security of our gasoline supply or stability of gasoline prices.”
It might not even be environmentally sound.
“Producing one gallon of ethanol may well take more energy than the end product contains,” she says. “With fertilizer, water, an energy-intense fermentation process, and transportation necessarily by rail or truck instead of existing pipeline, ethanol production utilizes much more energy than crude oil to reach the pump.”
“Producing one gallon of ethanol may well take more energy than the end product contains,” she says. “With fertilizer, water, an energy-intense fermentation process, and transportation necessarily by rail or truck instead of existing pipeline, ethanol production utilizes much more energy than crude oil to reach the pump.”
Using food for fuel doesn’t make sense.
“Perry and Hutchison deserve praise for recommending solutions to the folly of our current federal policy to transform a major foodstuff into a fuel,” Ms. White concludes.
“Perry and Hutchison deserve praise for recommending solutions to the folly of our current federal policy to transform a major foodstuff into a fuel,” Ms. White concludes.
