[Congressional Record Volume 157, Number 84 (Monday, June 13, 2011)]
[Senate]
[Pages S3709-S3712]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ETHANOL
Mr. THUNE. Mr. President, tomorrow the Senate will vote on a cloture
motion that deals with an amendment that would do away with a tax
provision that was enacted many years back by Congress but was extended
just this last December. In fact, there were a whole series of tax
extenders that were passed by the Congress in December of last year,
but this particular one, the volumetric ethanol excise tax credit, was
also extended. It was extended until the end of the year 2011. December
31 of this year is when it would expire with the amendment we will be
voting on tomorrow--or at least the cloture motion we will be voting on
is with regard to an amendment that would eliminate that and end it
now. There are a number of problems associated with that approach, one
of which is this issue of economic certainty. We have lots of people
across this country who have made investments. We have lots of jobs
that are impacted by this industry. In fact, if you look, there are 204
plants, ethanol plants, in America today, spread across 29 States and
on the order of about half a million jobs--all of which, I might add,
are American jobs--you have half a million American jobs impacted by
this industry. The ironic thing, too, is coming on the heels of an
announcement last week that Venezuela, Libya, and Iran will block OPEC
from producing more oil to relieve gasoline prices, we continue to be
held more and more hostage every single day by our addiction to foreign
oil.
We send $1 billion a day outside the United States to purchase
foreign oil--$1 billion every single day to purchase foreign oil. The
ethanol industry, which now represents about 10 percent of the fuel mix
in this country, displaces 445 million barrels of oil every single
year. That is the equivalent of $34 billion that we don't send
overseas--445 million barrels of oil displaced every single year, $34
billion that we don't have to spend purchasing foreign oil. So this is
an issue that has a direct bearing on the issue of energy independence,
the issue of continuing what I think is a very dangerous dependence on
foreign sources of energy, foreign oil, and has a direct bearing as
[[Page S3710]]
well on the price consumers pay at the pump. Clearly, if you took 10
percent of the fuel mix out of production or out of that mix, you would
put an additional pressure on the price that currently is being paid by
consumers.
In fact, there was a study done by Iowa State University that said,
in 2010, if you took away the contribution ethanol makes to the fuel
mix in the country today, you would see gasoline prices increase by 89
cents per gallon. When you are already facing $4 gasoline prices in
this country, which I think is having a profound impact on our economy
and particularly on consumers who, day in and day out, are having to
deal with these high prices, it seems ironic that we would be looking
at legislation and policy that would further drive up the cost of
gasoline. We ought to look at ways we can reduce it, and this clearly
would have the opposite effect.
A few weeks ago there was a proposal to put additional taxes on oil
and gas or at least to change some gas policy with regard to oil and
gas which many of us argued would add to the cost of gasoline in this
country. It would essentially, in effect, be raising taxes on gasoline.
This proposal would have the same effect. It would increase the cost
of energy and obviously impact many of the jobs to which I just
alluded. It would also break faith with the commitment made by this
Congress last December when we extended the VEETC, the volumetric
ethanol excise credit, for another year. We have a lot of folks who
made investments, you have people across the country whose livelihoods
and jobs depend upon this, and I think it makes sense, when we put
policy in place and we say it is going to be in place for a certain
period of time, that that be honored.
Having said that, I have been working closely with my colleague from
Nebraska and others of our colleagues on both sides of the aisle,
Republicans and Democrats, on a proposal that would reform the VEETC
and move us in a direction that puts us on a pathway or a trajectory
into the future that will take greater advantage of this contribution
that is being made by biofuels to our country's energy independence and
also phase out the VEETC tax credit but that does it in a way that does
not impact and disrupt in a way that this would, where you say you are
going to end this today. As I said, you have lots of people who made
investment decisions based on current policy. You would change that
policy immediately and abruptly, but that is not the right way or
correct way to go about this. There is a better way. That is what my
colleague from Nebraska and I have been working on. I hope my
colleagues in the Senate will vote tomorrow against this attempt to end
this abruptly and to disrupt this market and do tremendous harm to an
industry that is contributing, in a significant way, to America's move
toward energy independence and is helping to keep gas prices lower than
they would otherwise be were it not for the 10-percent contribution
ethanol makes year in and year out to our energy.
So there are lots of reasons why we think it is a bad idea to move
forward with the amendment that will be offered tomorrow and the
cloture motion that would get on that amendment. I hope my colleagues
will defeat that cloture motion so we can work on a more responsible,
reasonable way that phases out the VEETC and, in a responsible way,
that would allow those who have made investments to be able to plan
accordingly.
I would simply say, as we get into that debate tomorrow, this is an
issue which has ramifications for our economy because of the price of
fuel and the impact ethanol has on the price of fuel in this country.
It has an impact on the old issue of energy independence and whether we
are going to continue to be held hostage and over a barrel by oil we
have to import from other places around the world. Of course, it has
implications as well for just the jobs that are created here at home,
American jobs that could very well be lost if we move down a path that,
in my view, would be very harmful for this industry and its ability to
create jobs.
I have my colleague from Nebraska here as well this afternoon and I
would welcome his thoughts on this subject and would like to enter into
a dialog with him about the impact this industry has on his State of
Nebraska--and not just the impact it has on Nebraska or South Dakota
but the impact it has on this country by creating jobs, by lessening
the dependence we have on foreign sources of energy, and by keeping gas
prices at a more reasonable level than we would otherwise see if it
were not for the contribution ethanol makes to our fuel mix.
I am going to yield to the Senator from Nebraska for his observations
about this subject.
The ACTING PRESIDENT pro tempore. The Senator from Nebraska.
Mr. JOHANNS. I wish to start out thanking my colleague from South
Dakota. He has been a very reasoned voice on this issue, and he has
brought forward some ideas that I believe are the right approach to
dealing with ethanol. If you think about it, about 50 percent of our
oil is now imported from another part of the world. The more dramatic
piece of that is that oftentimes the importation of that oil comes from
parts of the world that do not share our philosophy, do not share our
view of the world, are not democracies, and do everything they can to,
in effect, fight against what we believe in. So not only are we
dependent on foreign oil, we are dependent on a source of foreign oil
that oftentimes is contrary to the values and beliefs of American
citizens.
One of these days, I think we are going to learn the lesson of that
dependency, and we are going to alter our course. We are going to do a
whole host of things that make sense: more drilling, more exploration,
more nuclear power plants, as Senator Lamar Alexander has advocated
for, and just everything on the list. It is all a piece of the puzzle.
A piece of that puzzle is also renewable fuels. It could be
biodiesel, it could be ethanol, it could be cellulosic ethanol, which I
championed when I was Secretary of Agriculture. Again, I think it is
going to be a whole host of things.
Ten or twenty years ago, if I were on the Senate floor making those
statements, many would have looked at me and said: Well, Mike, that is
just a pipedream. But as the Senator from South Dakota points out, 10
percent of our fuel in the United States is now ethanol--10 percent. It
did displace 445 million barrels of oil last year. There is nothing
else going on out there that has had that kind of impact. We can report
that $34 billion was kept in the U.S. economy. We often hear about this
massive transfer of wealth that is occurring by us sending our hard-
earned dollars to other parts of the world--again, parts of the world
that do not share our values. In this case, with this product, we kept
$34 billion here. At least one study indicates the average family saved
$800 a year because of this. Our gas prices are about 89 cents lower
per gallon than they otherwise would have been. Those are real savings
to people who are out there trying to figure out how to pay for filling
the tank.
Many years ago, when I was Governor of Nebraska, we took a long, hard
look at our State. We wanted to know how we might best diversify our
economy. Some of the things we did worked. I am very pleased to report
our unemployment rate during this time never got over 5 percent. Today
it is about 4.2 percent. I am also pleased to tell you we balanced the
budget. We did not borrow money to do it. One of the things we did was
we said: Look, ethanol is a piece of this puzzle in Nebraska, and so we
actually created State programs to try to encourage the construction of
ethanol plants.
I will tell you, at the time I was Governor, I thought maybe two
plants would be built. Well, the marketplace responded and we built a
number of plants. Today, Nebraska is the second largest producer of
ethanol. We have 24 plants in the State. Those 24 plants produce 2
billion gallons per year, $4 billion of capital investment. It directly
employs 1,300 Nebraskans in high-quality jobs. It also does some great
things for our livestock sector because our cattle industry--well, they
buy the distiller grains. They have real value if you are feeding
cattle, which we do a lot in our State.
We have recognized in Nebraska, and I think across the country, that
it is time to move to the next step when it comes to ethanol
production. That is why I was pleased to sign on to Senator
[[Page S3711]]
Grassley's bill when he introduced it. I was also pleased to work with
Senator Thune who has provided such excellent leadership in this area.
Basically, what this plan does is it says: Let us take a thoughtful,
measured approach. Let's not jeopardize someone's situation and cause
them to pay higher fuel prices at the pump because we did something in
a rash and hasty sort of way. It also helps to pay off some of the
deficit. We are literally saying: OK, if we are going to make some
changes, we will make a contribution to deficit reduction.
Well, let me wrap up my comments and say: Senator Thune's approach is
the right approach. It is an approach that says: Look, we are not going
to take this industry, which has become such an important part of our
energy strategy, and walk it off the cliff and just see how it lands.
Instead, what we are going to do is, we are going to take a measured
approach. We are going to build the infrastructure necessary. We are
going to add some money to reduce the deficit, and we are not going to
jeopardize somebody's price at the pump. It is already expensive
enough. I am very pleased to support that approach. My hope is that our
colleagues will listen to this approach, get behind it, and support it
because it is the right approach. It is the right approach for
Nebraska, but it is the right approach for the country.
With that, I thank the Senator from South Dakota for his help.
I yield the floor to him.
Mr. THUNE. Mr. President, if I might just say to the Senator from
Nebraska, because I am wondering if perhaps in his discussions with
farmers and ranchers in his State--I am sure the issue which he alluded
to, which I think is an important one, comes out--I wonder if other
people around the country realize, when we make a gallon of ethanol, we
take a bushel of corn--which is a remarkable thing that we have gotten
to, where the technology enables us to do that--we produce 2.7 gallons
of ethanol from a bushel of corn. We have almost 3 gallons of ethanol
from a bushel of corn which goes into our fuel supply and represents
about 10 percent of all the fuel we use. I wonder if a lot of people
realize that one of the byproducts of that, as the Senator from
Nebraska has mentioned, is something called dried distillers grain. The
DDGs, as we refer to it, is something that is then used to feed
livestock.
Now, a lot of people think there is this whole corn debate about food
versus fuel, but I don't think most Americans realize that only about
12 percent of our corn crop in this country actually ends up in foods.
It is either consumed directly, such as corn chips, or indirectly, such
as high fructose corn syrup. But one-third of the grain that goes into
ethanol production comes out as dried distillers grain, these DDGs, and
for each bushel of corn used in the ethanol-making process--as I said,
the 2.7 gallons of ethanol--18 pounds of DDGs and 18 pounds of carbon
dioxide.
If we took, let's just say, for example, 5 billion bushels of corn
used for ethanol production in a year, the feed product equivalent of
about 1.7 billion bushels of corn is returned to the livestock food
chain as an ethanol byproduct. So we take about one-third of all of the
grain that is put into the process to make ethanol, and that comes back
in the form of something we feed to livestock and something that has
been a great source of protein for livestock producers in this country.
I don't think most Americans even realize we are not just talking about
the fuel component; we are not just talking about that liquid we use to
blend with petroleum products and get ethanol in this country; but
there is also this other byproduct which is essential for livestock
producers to feed their livestock.
I am wondering if, in the conversations the Senator from Nebraska, I
assume, has with his farmers and ranchers--of course, they are very
familiar with this--the average person around this country understands
this.
Mr. JOHANNS. Mr. President, that is an excellent point. When I was
Secretary of Agriculture, this whole debate started about food versus
fuel. It was almost like there was this impression that you took that
bushel of corn, you somehow burned it up to create ethanol, and that is
all you got out of it. Then there was this big debate about whether
that was worth it. As the Senator from South Dakota points out, a whole
different process is occurring.
So in our State, it is not just the dried distiller grains because to
dry them down takes some energy. We have the cattle yards in close
proximity to the ethanol plants. So they buy the wet mash, which is
what we call it. They ship it over, they feed it immediately, and it is
a wonderful product to feed to cattle.
When we think about the approach the Senator from South Dakota has
come up with, we realize it hits on all cylinders. It does reform the
ethanol tax credit. Again, I believe the industry has come to the
conclusion that is a thoughtful, reasonable step.
No. 2, it invests in the blender pumps. One of the challenges I had
for a long time was with the flex-fuel vehicle. I am in the State that
is the second largest producer of ethanol. Yet I could not get the E-85
unless we really went out and searched for it. What if we had a pump
where I could literally pull up to it and dial it up to E-85 and put
that in my vehicle? So it invests in the blender pumps.
It extends cellulosic tax credits for the small producers. Here is
what I would say: The next generation is not going to be just corn-
based ethanol. That will be a part of the picture, but I believe we
will see the day--and we are already seeing the day--where we will have
a cellulosic product converted into ethanol.
Then, finally, $1 billion is added to deficit reduction. The ethanol
industry is saying: Look, we agree we need to do our share. We agree we
need to start on this process of phasing this out.
So I think the Senator from South Dakota has hit all the right
points. It does not take this industry and drop it off the cliff. It is
a thoughtful, measured approach to dealing with this issue.
Again, I thank the Senator from South Dakota for his leadership, and
I yield to him.
Mr. THUNE. Mr. President, in closing, I wish to, first of all, thank
the Senator from Nebraska for joining us. He has a great wealth of
experience, not only having grown up on a family farm in his early
years but representing his State as a mayor, as a Governor, and then
representing our Nation as the Secretary of Agriculture. I recall
working with him when he was the Secretary of Agriculture on a lot of
these issues.
One of the things that strikes me about where we are today relative
to where we were then is the prosperity that has returned to the
agricultural sector in our economy, to rural America. We can't say the
biofuels industry has been solely responsible for that, but certainly a
contributing factor. We have seen growth in the economy in the Midwest.
Again, what I would point out about this, which is so important for
people to realize is that these are American jobs. This is our home-
grown industry. We are either going to get fuel in the United States or
we are going to buy it from some foreign country. That is what we have
been doing, and that is what we continue to do to the tune of $1
billion every single day. So to the degree we can promote domestic
energy production in this country and add to the supply in this
country, which is what biofuels does, it is for the American consumer
and, obviously, good for America's economy and America's dangerous
dependence we currently have on foreign energy.
So the proposal the Senator from Nebraska is a cosponsor of and that
he and I have worked together on and that we will file as a bill today
will present an alternative to the approach that will be advanced, or
that they will attempt to advance tomorrow, which is to just right now,
in a very disruptive way, abruptly end something that we just voted on
in December to put in place. We have people who have made investments
in it, and it has made a tremendous impact on jobs in this country.
The approach the Senator from Nebraska and I are advocating I believe
is a reasoned approach. It is forward looking in the sense that it
promotes the next generation of biofuels, advanced biofuels, and
cellulosic ethanol. In the same way the Senator from Nebraska
mentioned, it gets us to where we have more choices for American
consumers when they come into a filling station by investing in some of
the
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pumps out there and giving consumers more choices.
Then, finally, as the Senator from Nebraska said, it also puts money
toward the debt, toward deficit reduction, and phases out the tax
credit that is available today to ethanol producers in this country. It
is a reasonable, responsible and, as the Senator said, measured way of
dealing with this, not the way that is being proposed by the vote we
are going to have tomorrow.
So I hope our colleagues will join us in working in a constructive
way to continue to grow this industry and do it in a way that creates
jobs for Americans and lessens our dependence on foreign nations.
I yield the floor.
The ACTING PRESIDENT pro tempore. The Senator from Arizona.
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