USDA, DOE continue to support biofuels

By Kris Bevill | June 02, 2008
Web exclusive posted June 13, 2008 at 11:31 a.m. CST

USDA Secretary Ed Schafer and U.S. DOE Secretary Samuel Bodman issued a letter on June 11 to the chairman of the U.S. Senate Committee on Energy and Natural Resources, Sen. Jeff Bingaman, D-N.M., stating their respective department's continued support for biofuels.

"All of us recognize that high food prices and high gasoline prices are important "pocketbook" issues for American consumers," the letter stated. "We also recognize the national and economic security importance of reducing our dependence on imported oil as well as the urgency of developing new, cleaner fuels to reduce greenhouse gas emissions. Our biofuels policy makes important contributions to each of these goals."

Last month, the chairman had asked the USDA and DOE to answer several questions related to biofuels and the effect they are having on both the U.S. and the global economies. The letter sent by Schafer and Bodman included the departments' responses. The letter, as well as a question and answer document, can be viewed at www.usda.gov.

According to the USDA and DOE, in 2007 ethanol and biodiesel consumption accounted for 3 to 4 percent of the overall rise in retail food prices. For the first four months of 2008, that number rose to 4 to 5 percent. Schafer and Bodman say record gasoline and diesel fuel prices, population growth, drought and other bad weather patterns, export restrictions and a depreciating U.S. dollar account for the other 95 to 96 percent increases.

In answer to Bingaman's question as to how ethanol and biodiesel use have affected gas and diesel prices, the USDA and DOE have determined that biodiesel has had virtually no effect on diesel prices because it comprises such a small share of the total diesel fuel use. However, ethanol use has lowered gasoline prices. "If we had not been blending ethanol into gasoline, gasoline prices would be between 20 cents per gallon to 35 cents per gallon higher," the letter stated.

Additionally, the most recent global energy analysis conducted by Merrill Lynch states that "biofuels are now the single largest contributor to world oil supply growth." The company's analysts estimate that without biofuels, retail gasoline prices would sell for $21 per barrel more than the current price.