(1888PressRelease)
May 31, 2008 - Omaha, Neb. – The total global increase in corn-based ethanol production accounts for only 3 percent of the recent increase in global food prices. This according to a statement from Agriculture Secretary Ed Schafer in which he noted ethanol is not having a “major” impact on food prices.
After the hype, hysteria and spin of the ongoing “food and fuel” debate, these facts from the Council of Economic Advisors provide further proof the ethanol industry has been made a scapegoat for global issues beyond our control.
For many ethanol critics, it is easy to look past the primary factor that is causing a ripple effect throughout the global economy – namely exorbitant oil prices which have increased from $35 in 2005 to more than $125 today – nearly 300 percent.
The growing outcry to relax renewable fuels requirements is ill-advised. Changing U.S. energy policy will not provide short-term relief on the food supply and decrease food prices as many expect. In fact, relaxing the renewable fuels mandate actually may escalate food prices now and in the future by driving fuel prices even higher.
Across the country, including 10 percent ethanol in gasoline has held the price per gallon down by $.15 to $.45 depending on the region of the country. Reducing ethanol requirements by 50 percent removes 4.5 billion gallons of ethanol from the fuel supply. This will reduce the total fuel supply, causing transportation, fertilizer, fuel, packaging and other food production costs to continue to increase, further inflating the price of food.
Corn-based ethanol is not a silver bullet, yet it is the pioneer of the renewable fuels industry. By contributing to research funding, it is opening the door for future advancements such as cellulosic ethanol made from non-food biomass such as switch grass and wood waste. It has created a production and delivery infrastructure, and it is used and accepted by millions of consumers, making the transition nearly seamless.
If we are to solve the issue of rising costs throughout the entire global economy, we must find solutions to our dependence on outrageously expensive foreign oil. View USDA Food and Fuel Slides.
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