Defending the standard
Column: Insight
John Schlageck
Saturday, August 23, 2008
It’s important. It serves a vital purpose. It provides substantial economic benefits.
The it I’m writing about is the Renewable Fuels Standard. And now thanks to an Environmental Protection Agency decision, implementation of the RFS will continue as legislated in the Energy Policy Act of 2007.
This decision ensures consumers will continue to benefit from an expanding supply of domestically produced renewable fuel, which is helping lower gas prices.
Those savings at the pump are considerable — as much as $500 per year for the average family, according to estimates by Merrill Lynch, Iowa State University and others.
The August 7 decision is an important win for American consumers. People are justifiably focused on pocketbook concerns in today’s economy. Ethanol is one of the few things helping families save money.
For months opponents of ethanol have been telling those foolish enough to listen this renewable fuel is responsible for high food prices. Texas Gov. Rick Perry led the charge by arguing the mandate – now mostly met by ethanol made from corn – was raising the price of livestock feed and otherwise upping prices at the grocery store. Perry demanded the EPA do something about it.
The EPA did something about it all right. The agency denied the Texas governor’s request. Texas had requested a 50 percent waiver of the national volume requirements for the RFS.
As a result, the Renewable Fuels Standard stands pat. The RFS target for 2008 is 9 billion gallons of renewable fuels including ethanol and biodiesel. That raises to 11.1 billion gallons in 2009 and 36 billion gallons in 2022.
Following extensive analysis, EPA administrator Stephen Johnson said the Texas request had not proven the Renewable Fuel Standard is causing “severe economic harm” which is the legal requirement for suspending it. To the contrary, Johnson argued, the law is “strengthening our nation’s energy security and supporting America’s farming communities.”
And this federal mandate can in no way be considered heavy handed. While nine billion gallons of biofuels a year may sound like a huge amount, it’s only 3 percent of the 300 billion gallons of oil the United States burns annually.
There is no doubt high commodity prices are having a limited economic impact, but it’s far less than food processors would lead you to believe.
Today, wheat sells for approximately $7.50 a bushel in Kansas. A bushel weighs 60 pounds which is enough to bake about 60 loaves of bread. That means the Kansas wheat farmer received 12 cents for the loaf of bread that cost you $3. The rest goes to the middlemen for baking, milling, labor, transportation, packaging advertising, taxes and finally, profit.
If you want to single out the main culprit behind higher food prices, I don’t think anyone would be surprised – it’s higher oil costs. Most Kansans support the EPA’s decision to continue using alternative fuel sources such as ethanol. This strategy will lessen our dependence on imported oil.
The U.S. Environmental Protection Agency made the right call on this one. This nation’s farmers have long, and strongly, supported renewables including but not limited to ethanol. The renewable fuels standard was good policy when it passed in Congress, and it’s just as good today.
Comments
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Posted by emporian (anonymous) on August 23, 2008 at 12:27 p.m. (Suggest removal)
Too bad ethanol costs us more energy to make than it yields. You take away subsidies and ethanol couldn't exist, especially corn based ethanol.
Posted by jayhawker (anonymous) on August 23, 2008 at 1:04 p.m. (Suggest removal)
Not only is it economically feasible only because of government, tax funded subsidies, it consumes more energy to produce than it yields. Further, it causes an increase in food costs because it consumes agriculture commodities that would otherwise be in the food production chain. Perhaps it has a future, but for now it belongs only in R&D. The only reason that it is being mass produced is so that the politically correct, global warming green crowd can feel good. It does not currently help with the energy crisis; in fact, it contributes to it.
Posted by shoehorn (anonymous) on August 23, 2008 at 1:40 p.m. (Suggest removal)
The 3% reduction in petroleum based gasoline only consumed 25% or the corn produced in a year with a record corn crop. Why did the article switch from bio-fuels, (corn) to the price of bread (wheat)?
Posted by roger (anonymous) on August 24, 2008 at 3:20 p.m. (Suggest removal)
Big oil and the Republican party has fed you your wrong talking points. I am tired of trying to correct the ignorance. The correct info is out there but some people are too lazy and stupid to learn.
Posted by jayhawker (anonymous) on August 24, 2008 at 8:56 p.m. (Suggest removal)
I don't know what Republican talking points have to do with this, Roger, other than they are more factually based than the other party's, but the facts are very clear that: 1) ethanol produced to blend with petroleum fuel consumes more energy than it produces; 2) it is only economically possible because of tax subsidies; 3) it badly hurts the fat cattle producer because it drives up the price of corn, and the price of corn is what the fat cattle people live by; and 4) it causes a price increase in grain based cereals used for human consumption. At this time, it does not assist in decreasing our demand for foreign petroleum; in fact, it increases it. It is wise policy to continue R & D on it, because it may have future value, but we have jumped the gun on it. Those are facts.
Posted by Summer_Breeze (anonymous) on August 25, 2008 at 10:56 a.m. (Suggest removal)
Jayhawker's points are accurate and a cause for concern. Americans seem so caught up in trying to reduce their at-the-pump consumption that they fail to consider all the economic downsides to ethanol that Jayhawker lists.
Here's a link to an awesome fuel alternative that won't harm the planet or the economy in other ways, but our government and the media choose to ignore it: http://www.valcent.net/i/misc/Vertigro/i...
Check it out!
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