[Congressional Record (Bound Edition), Volume 151 (2005), Part 15]
[House]
[Page 20749]
[From the U.S. Government Publishing Office, www.gpo.gov]




                   COST OF E85 FUEL AND UNLEADED FUEL

  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, I am certainly a great supporter of the 
ethanol industry. Ethanol does a great many good things. It reduces our 
dependence on foreign oil. It reduces the trade deficit, which is 
certainly a very difficult problem for our economy. It reduces the cost 
of the farm bill. And it helps the economy, creates roughly 200,000 
jobs. And, of course, it also produces more energy than it consumes.
  Mr. Speaker, this is something that is widely misunderstood. And I 
would like to show the chart here, Mr. Speaker, that I think 
illustrates something that many people do not realize. For every Btu of 
energy that goes into the process of making ethanol, you get roughly 
1.4 Btus of energy back.
  On the other hand, with gasoline, for every Btu that you put into the 
input cost into the manufacturing, you get eight-tenths of a Btu back. 
An MTBE which, of course, is a fuel additive, for every one unit of 
energy you get sixty-seven hundredths back.
  Now the reason for that is that ethanol harnesses the energy of the 
sun, as corn grows. And so it is a net savings. And so a lot of good 
things about ethanol, a lot of things that are positive.
  However, there are some things that have occurred here recently that 
are rather disturbing at the present time, and I think that this 
following chart pretty well illustrates this. We had assumed that since 
ethanol is made from corn, corn prices are low. In Nebraska recently, 
the price of a bushel of corn was $1.54. And a good price would be 
maybe $3 a bushel. So corn is very, very low right now. That is the 
primary ingredient to make ethanol.
  We have heard about the refinery capacity being reduced. And that has 
been a problem that has caused gasoline prices to spike. But ethanol is 
not dependent, largely, upon the refinery industry.
  Fifteen percent of E85 is gasoline. The other 85 percent is ethanol, 
which is made at an ethanol plant, which is really distributed mostly 
across the Midwest. So the hurricane had absolutely no effect on most 
of the cost of ethanol, and yet we find these things to be true.
  On August 1 of 2005, in North Platte, Nebraska, the cost of E85, 85 
percent ethanol, was just slightly under $2; $1.99 a gallon. In 
Lincoln, Nebraska it was $2.04. So, pretty close; just a 5 cent spread.
  However, by September 19, yesterday, that price had risen 
dramatically. North Platte was $2.69 a gallon, which was a 70 cent 
increase. Lincoln, Nebraska was $3.09, which was $1.05.
  Again, we understand that there is a shortage of fuel. We realize 
there are refinery problems. But ethanol should be pretty much 
insulated from those problems. So it is very difficult for those of us 
who are fairly close to that industry to understand how in the world we 
could see those kinds of increases in such a short period of time.
  By the same token, the cost of unleaded fuel, with no ethanol in it, 
actually was cheaper in North Platte and Lincoln by 10 cents and 40 
cents a gallon, and this is unheard of, because normally E85 should run 
30, 40, 50, even 60 cents a gallon cheaper, because there is a 51-cent 
tax credit for ethanol because of the fact that it does rely primarily 
on corn, which is a domestically produced commodity.
  So anyway, we are quite concerned about this. We have asked people to 
look into this. I believe that the Energy and Commerce Committee is 
willing to take a look at it, the volatility of fuel prices and the 
fact that this is really very damaging to our economy.
  It is very damaging to our farm economy, particularly, and they are 
the ones that produce the ethanol. So this is really something that is 
very puzzling and something that we are hoping that Congress, 
particularly the Energy and Commerce Committee, can get to the bottom 
of.

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