Fighting the Good Fight
The ethanol industry fights an ongoing battle as we work to end our dependence on foreign oil and create jobs here at home that cannot be outsourced, while producing a fuel that is cleaner burning and better for our environment. Though it sometimes can be easy to lose sight, the increasing challenges we face are directly correlated to our achievements. In particular, with higher blends of ethanol in gasoline gaining greater acceptance, we are hitting OPEC and foreign oil where it hurts most—their pocketbooks.
We have always been a target of those aligned with foreign oil, but now we have broken through. Unlike the dog track races where the mechanical rabbit is never caught, we have caught the rabbit, and that has sent a reality shock to these critics. As a result, their attacks are more frequent and even more misleading. It is important to keep this in perspective as we persevere with corn ethanol and next-generation biofuels. Oil companies are threatened by our success—if we don’t need foreign oil, it’s a game changer.
The unyielding heat and drought have provided new fodder for negative press. With critics making inaccurate claims that ethanol is the reason for increased food costs, we must continue to set the record straight. The folly of this argument can be traced back to 2008, when the Grocery Manufacturers Association concocted a campaign to blame ethanol for increased food prices. The myth continues, even though objective studies have shown no substantial connection.
Using these arguments, the critics are calling for a change in the renewable fuel standard (RFS). The RFS was enacted with flexibility in mind, however, and free market forces are taking effect. Ethanol production has decreased, with some plants even temporarily ceasing production due to market forces. Less corn was being ground and production slowed, reducing barrels per day by roughly 100,000 in July. During the month of July, there was nearly a billion gallons of excess ethanol, as well as over 3 billion renewable identification numbers (RINs) available, creating several options to ensure that the volume goals of the RFS can be met, while also meeting the obligations of the corn crop for feed.
As rumors shifted into high gear this summer, USDA Secretary Tom Vilsack went on CNN to dispel them, saying, “What really drives food prices more significantly are energy costs.” Vilsack then went on to criticize the price-gougers who are manipulating the drought as a means to raise prices at grocery stores nationwide. Additionally, at the height of the drought, the United Nations along with the Organisation for Economic Cooperation and Development released an agricultural report on the correlation between oil and commodity prices, stating, “Global agriculture is increasingly linked to energy markets… These higher oil prices are a fundamental factor behind the higher agricultural commodity price projections…”
To put things in perspective, in 2011, ethanol production used only 3 percent of the global grain supply. Simply put, corn is an industrial feedstock—caloric energy converted from solar energy to starch, protein and fiber. There are a number of uses for corn, most notably as livestock feed and in ethanol production. And, more than one-third of every bushel of corn used in ethanol production is returned to the food chain in the form of the highly valued, nutritious animal feed, distillers grains.
Increased food prices are directly attributed to higher oil prices—it costs more to harvest, transport, process, refrigerate and package the goods that show up at your grocery store. And this summer, the driving force for the increase in commodity prices and futures was an act of Mother Nature—a lack of rain.
Now that we have “caught the rabbit,” it falls upon us to ensure we communicate our message, dispel myths and distorted facts and educate consumers with the truth. If it is not a drought, our critics will continually use some other illogical and misleading argument to try to discredit us and stymie our success. Growth Energy is proud to represent America’s producers and supporters of ethanol and will continue our campaign to educate the American people about the benefits of producing a low-carbon, cleaner-burning fuel that is creating economic opportunity while reducing our addiction to foreign oil.
America needs an “all of the above” strategy to eliminate our dependence on foreign oil, and not an “all of the above, except renewables,” as proposed by our critics.
Author: Tom Buis
CEO, Growth Energy