[Congressional Record Volume 154, Number 37 (Wednesday, March 5, 2008)]
[Senate]
[Pages S1656-S1658]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
BENEFITS OF RENEWABLE FUEL
Mr. THUNE. Mr. President, this last year, Americans sent almost half
a trillion dollars, almost $500 billion, overseas to purchase imported
oil from other countries around the world. Think about that massive
transfer of wealth and what that means for our national security
because, in many respects, a lot of those dollars being used to
purchase imported fuels are going to countries that are not favorable
toward the United States. Of course, some say it is a world market, let
the market work.
The difference is that most of our trading partners around the world
are people we consider to be at least friends, allies, folks we do
business with. They are not countries that are funding organizations
that are trying to kill Americans. Regrettably, what we end up doing is
funding both sides of the war on terror, because we send almost half a
trillion dollars annually to foreign countries, petro dictators around
the world who use those dollars to fund terrorist organizations that
are designed to kill Americans, and then we end up having, of course,
to fund our military to go fight the very same terrorists. It seems
like a very misguided policy.
I make that point because I think we have a dangerous dependence on
foreign energy. Today, 65 percent of our petroleum comes from outside
of the United States. As most of us know, the fuels in this country are
mostly petroleum based. The reason I say all that is I think we have an
important decision to make in this country about whether we are going
to continue to subsidize foreign governments, petro dictators who use
those dollars that transfer wealth out of this country to fund
terrorist organizations that attack Americans, or whether we are going
to make an investment in the United States that provides benefits to
the economy in America and provides jobs for Americans. I think that is
an important decision we have to make.
For the past several years, this Congress as a matter of policy has
tried to put into place incentives to increase the production of
renewable energy, and with some degree of success. If you look at last
year and this year, by the end of this year, we will be at about 7.5
billion gallons of ethanol produced in the United States. There are
some 160, I think, ethanol biorefineries in this country. If you look
at it, 22 States are home to some of those, with a collective capacity
of over 7.5 billion gallons. There are sixty biorefineries under
construction and several plants are in the process of expansion. That
is a great story for America and for our agricultural economy. It is
also a great story for our national security, in my view.
Lately, we have had a lot of attacks launched on the ethanol
industry, and on renewable fuels generally. Many of them have been,
again in my view, very misguided and misleading in terms of the
reporting that has been done regarding food prices. If you look at
several editorials recently, the New York Times went out of their way
to discount the impact of high energy prices and worldwide demand for
protein as reasons for food price increases. Rather, they decided to
blame ethanol by
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stating, ``The most important reason for the price shock is the rich
world's subsidized appetite for biofuels.'' The editorial board claims,
``The benefits of this strategy are dubious.''
A February Washington Post article, entitled ``The Problem With
Biofuels,'' leads the public to believe that biofuels will only serve
to starve people. The article quotes a university study and states,
``By putting pressure on global supplies of edible groups, the surge in
ethanol production will translate into higher prices for both processed
and staple foods around the world.''
The food versus fuel debate is an important debate to have. However,
it has to be based upon facts and not anti-
renewable fuel rhetoric.
It is a fact that energy prices have a 2-to-1 greater impact on food
prices relative to the price of inputs such as corn.
Last year, John Uranchuck of LECG issued a report detailing the
impact of rising energy prices on the price of food. According to that
study,
Increasing petroleum prices have about twice the impact on
consumer food prices as equivalent increases in corn prices.
A 33 percent increase in crude oil prices--the equivalent of
$1 per gallon over current levels of retail gasoline prices--
would increase retail food prices measured by the CPI for
food by 0.6 to 0.9 percent. An equivalent increase in corn
prices--about $1 per bushel over current levels--would
increase consumer food prices only 0.3 percent.
In December 2007, Informa Economics issued a report called
``Marketing Costs and Surging Global Demand for Commodities Are Key
Drivers of Food Price Inflation.'' This report also concluded that the
price of raw commodities is not the leading component of the Consumer
Price Index for food. Rather, this report correctly identified rising
energy and transportation costs as leading causes of food inflation.
To place the blame for food inflation on biofuels and the rising
prices of certain commodities is simply misguided. According to the
U.S. Department of Agriculture, costs of food inputs only account for a
fraction of food prices. Specifically, labor, packaging,
transportation, advertising, and profits account for 68 cents of every
dollar a consumer spends on food.
The long-term outlook for corn prices under the expanded renewable
fuels standard is somewhere in the $3.25 to $3.50 per bushel range. To
put that into perspective, so the average person around the country can
understand what I am talking about, the average box of corn flakes
contains about 10 ounces or one ninetieth of a bushel of corn. Even at
$4 corn--$4 a bushel corn--that amounts to 5 cents of corn in a box of
corn flakes. Think about that. A box of corn flakes. Everybody assumes
the farmer, because of high corn prices, is cutting a fat hog, but 5
cents of that goes back into the farmer's pocket. Attributing food
inflation to biofuels and corn-based ethanol is simply untrue.
Now, with respect to climate change, because we have heard a lot of
discussion as well and criticism of the ethanol industry with regard to
how it impacts that debate, critics of renewable fuels have also
started blaming climate change on renewable energy. I find that hard to
believe, as well, because the purpose of biofuels is to replace
petroleum as a fuel source. For years, environmentalists have decried
petroleum as a major emitter of harmful carbon emissions. Today, we
have a homegrown alternative that is displacing more and more petroleum
by the day. Some are claiming now that ethanol is creating more global
warming. If our national policy is to manage climate change, falsely
blaming ethanol for global warming is not helpful to the cause.
According to the Argonne National Laboratory, regular blends of
ethanol, gasoline containing 10 percent ethanol, reduce greenhouse gas
emissions by 18 to 29 percent relative to regular gasoline.
As more ethanol is produced and consumed, our Nation's carbon
footprint will continue to shrink. In 2006, ethanol use in the United
States reduced carbon dioxide emissions by approximately 8 million
tons. Such a reduction is the equivalent of removing 1.21 million cars
from the road.
As Congress continues to debate climate change legislation and the
causes of global warming, it is important to set the record straight.
Ethanol production is a carbon sink, not a net producer of carbon
emissions. Furthermore, as new types of cellulosic ethanol come online,
the carbon-reducing benefits of ethanol are only going to increase.
Ethanol may be able to be blamed for some other transformations in
our economy. For one, increased ethanol production is allowing our
demand for gasoline to go down and displacing foreign imports of oil.
Again, I point to some of the statistics that bear that out. If you
look at the amount of ethanol that is being produced in America today--
and this is based on a 2007 number--in 2007, the ethanol that was
produced, 6.5 billion, in this country displaced the need for 228
million barrels of oil, saving American consumers more than $16 billion
or $45 million a day from going to countries, as I said earlier,
outside the United States and enriching petrodictators who would do us
ill will.
If we look at the impact on tax revenues coming into the Treasury,
the ethanol industry generated an estimated $4.6 billion in Federal tax
revenue and $3.6 billion in additional tax revenue for State and local
governments. So if you couple that with the fact that according to the
USDA--and I think this is an important point to make, too, by those who
would criticize ethanol--according to the USDA, the increased demand
for grain use in ethanol production reduced Federal farm program costs
by more than $8 billion last year, meaning that even with the cost of
the tax incentive that we use to encourage more production of ethanol,
ethanol saved U.S. taxpayers, when you couple that with the additional
tax revenue coming into the Treasury and the $8 billion that was saved
because the Federal Government was not making farm program payments to
farmers in this country, U.S. taxpayers saved more than $9.2 billion as
a result of this industry.
Right now, about 50 percent of the gasoline in this country is
blended with ethanol, and before very long, we hope that from coast to
coast we will have every single gallon of gasoline in this country
blended with ethanol.
But my point very simply is: This has been a great success story, one
which has benefited and enriched our country, our farmers, people in
this country who are working hard making a living contributing to a
better quality of life for all Americans, as opposed to shipping all
that wealth outside the United States to other countries.
Let me restate what I started by saying at the very beginning, and
that is that last year, we spent almost half a trillion dollars, almost
$500 billion, in purchasing imported oil. That, again, makes absolutely
no sense to me in light of these statistics that I shared. I think as
we look at the future of this industry and the promise it holds and the
benefit it holds, not only for the economy in this country but also as
we get away from this dangerous dependence on foreign sources of
energy, renewable fuels, biofuels, have a great future for America, and
I believe we ought to be continuing to invest in making sure that those
who are involved with that industry--our farmers, those who are
constructing ethanol plants around this country, that we provide not
fewer incentives but more incentives for this kind of biofuel
production that, again, gets rid of the carbon in our atmosphere,
cleans up our environment, lessens our dependence on foreign sources of
energy, and puts dollars back into the pockets of hard-working
Americans, farmers, the rural economy, creating jobs, helping grow the
economy right here at home in the United States rather than shipping
those dollars to some foreign country where, again, many of these
dollars are used to turn around and fund organizations that are
designed to undermine America's interests around the world.
This debate will continue to percolate around this country, but when
we get into this debate about food versus fuel, it is important we have
the facts in front of us because this industry has undergone a lot of
criticism of late. As I said before, I think much of it is misguided
because it is based on misinformation and wrong facts. We need to have
the facts in front of us, and then we can have a meaningful debate.
Until that happens, we are going to hear more of these false attacks
against an industry that is creating American jobs, helping reduce our
dependence on foreign energy, and I hope, in the very near future, we
will be able
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to increase the amount not only of production in this country but the
amount of consumption because I believe in the very near future we will
start seeing more and more momentum for increasing the blend rate.
Right now, we blend 10 percent ethanol, as I said, in 50 percent of
the gasoline in the country. I hope in the future we can increase that
to 20 percent. The University of Minnesota completed a study where they
compared effects of 10 percent and 20 percent on materials
compatibility, driveability--all those types of issues. The result of
the data that came from that study was that you can move to a 20-
percent blend, a higher blend, an intermediate blend right now and have
no impact on any of those issues.
The issue of emissions is still being studied. The renewable energy
laboratory in Golden, CO, and the Department of Energy and EPA are
undertaking some studies. When that data comes in, I believe it will
show what the University of Minnesota study has shown and that is you
can go to a higher blend with minimal impact and, in fact, in many
cases with a better result; that we should move very quickly. I am
going to encourage the administration and continue to try to influence
that decisionmaking process in a way that will increase the amount of
ethanol that is used in this country so, again, we can achieve the many
benefits that I think dependence on American agriculture creates for us
as opposed to our dependence upon foreign energy.
I yield the floor.
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