[Congressional Record (Bound Edition), Volume 149 (2003), Part 21]
[House]
[Pages 29809-29810]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        RENEWABLE FUELS STANDARD

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Nebraska (Mr. Osborne) is recognized for 5 minutes.
  Mr. OSBORNE. Mr. Speaker, yesterday the House passed an energy bill, 
the first comprehensive energy bill that we have had in more than a 
decade. It is now being considered by the other body. I would like to 
talk about just one small part of the energy bill and that is the 
ethanol industry. Sometimes this is controversial. Many times people 
feel that this is simply a giveaway to the Midwest and particularly to 
farmers, but I would like to take another look at this.
  It is true that the ethanol tax credit is 52 cents a gallon. In 2003, 
we produced 2.7 billion gallons of ethanol, so that amounts to a $1.4 
billion tax incentive. Of course, that is a cost to the taxpayer. But 
that is not the end of the story. The ethanol industry increases the 
demand for corn by roughly 10 to 15 percent and as most people 
understand, when the demand goes up, it also drives the price up. What 
happens is that we, because of the ethanol industry, increase the price 
of corn by a minimum of five to 10 cents per bushel, and in 2002 it is 
estimated that the price of corn increased by roughly 40 to 50 cents 
per bushel. As prices rise, farm price supports decrease. For instance, 
if a bushel of corn brings $1.50 a bushel, the price support at $1.50 
is 82 cents in the farm bill. If the price goes to $2.70,

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there is zero price support. As a result, what we have found is that 
the increase in price driven by ethanol decreases the cost of the farm 
bill by roughly $1 billion. As a matter of fact, higher commodity 
prices in 2002 reduced farm bill spending by roughly $3 billion along 
with the drought. In 2003, the farm bill is going to be reduced by 
roughly $6 billion from projected cost. That is a 25 to 30 percent less 
costly farm bill than what we had anticipated.
  In addition, and this is something that is really important, ethanol 
is projected to lower gas prices by 6.6 cents per gallon based on 2002 
prices. What that does, it translates into a $3.3 billion annual 
savings to consumers. On the one side, we have a $1.4 billion tax 
incentive which costs the taxpayers, but on the other side we have a $1 
billion tax saving in the farm bill and we also have a $3.3 billion 
saving at the pump. So the net saving of the ethanol part of the farm 
bill and a part of the energy bill is roughly $3 billion.
  In addition, ethanol reduces dependence on foreign oil, equal to 
about what we received from Iraq before the war; reduces greenhouse gas 
emissions by 12 to 19 percent; reduces carbon dioxide by 35 percent; 
provides 192,000 new jobs in the United States; improves the U.S. trade 
balance by $2 billion; increases net farm income by $4.5 billion 
annually; and it can be produced from corn stalks, rice straw, waste 
products and switchgrass, so it is not confined to the Midwest States. 
As a matter of fact, we have some ethanol plants being developed now in 
California. It also increases the octane in fuel because of higher 
combustion rates.
  Then I would like to mention also the fact that it can be used in 
diesel fuel to increase energy efficiency. It can be used to produce 
fuel cells. And also it produces high protein livestock feed as a by-
product.
  The last thing I would like to mention is something that is very much 
misunderstood. We often hear people say, it takes more energy to 
produce ethanol than it yields. Actually for every BTU of fossil fuel 
used to produce ethanol, that is, to plant the corn, to till it, 
cultivate it, harvest it and process it, for every 1 BTU, British 
Thermal Unit, you get $1.389 BTUs of energy. In contrast, for gasoline 
for every BTU you get .808 BTUs, and for MTBE you get .675 BTUs of 
energy. You have a much higher yield.
  You say, where does this come from? Basically, it comes from the fact 
that the corn absorbs the sun and this extra energy comes from the sun. 
It is very energy efficient, and we think it is going to be a 
tremendous benefit to the U.S. economy as we move forward and as we go 
from 2.7 billion gallons of ethanol to roughly 5 billion within the 
next few years.

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