August 13, 2010
Opinion: APOV: A strong case for ethanol
Published in Daily News Online
We would like to respond to an editorial appearing in the July 27 edition of your newspaper titled “A subsidy for ethanol: End government support.” This editorial called for an end to the 45 cent per gallon blenders credit paid to oil companies for their use of ethanol and went on to suggest that ethanol is contributing to the destruction of forest lands as corn acreage grows, is increasing food costs, and is less efficient than gasoline.
The talking points expressed come directly from Big Oil and their campaign against any additional competition from ethanol. Corn ethanol is not responsible for destruction of forest land. Total U.S. crop acres are actually declining, total U.S. land devoted to crops will be 346 million acres in 2010 compared to 353 million acres in 2000. The U.S. corn ethanol industry does not need any additional acres to sustain growth. Continued increases in yields, driven by billions in investment by seed companies, are a direct result of ethanol’s corn demand. This has allowed national yields to increase from under 100 bushels per acre in 1980 to over 164 bushels per acre last year.
According to a June 2007 analysis of food, energy and corn prices conducted by John Urbanchuk of LECG LLC, “rising energy prices had a more significant impact on food prices than did corn.” In fact, the report notes rising energy prices have twice the impact on the Consumer Price Index (CPI) for food than does the price of corn. Meanwhile ethanol is keeping oil prices from moving even higher. The field corn used for ethanol production is not the sweet corn consumers are accustomed to seeing in the store. Less than 8 percent of field corn is used for direct human consumption; the majority is used for feeding livestock. Ultimately corn represents a very small percentage of overall food costs. Even a box of corn flakes that sells for over $3.50 contains only about 6 cents of corn.
Importantly, the co-product of ethanol production is a high-protein livestock feed known as dried distillers grains or DDGS that is recycled back into the local feed markets for use typically by dairy cattle. That is because ethanol production only utilizes the starch in corn; all of the protein and other important feed components revert to animal feed markets. For every bushel of corn received at an ethanol plant, approximately one third bushel of high quality DDGS feed is produced. DDGS contains three times the protein of corn and provides an overall higher feed value than corn itself. In addition to ethanol and DDGS, our Shelby plant also produces food-grade carbon dioxide for use in bottling and other local food processing, corn oil used to create biodiesel, and corn syrup used in several industrial applications.
While the author points out that ethanol contains less energy per gallon than gasoline (76,000 btu per gallon of ethanol compared to 124,000 per gallon of gasoline) there two very important facts omitted. One, on a cost-per-mile-driven basis ethanol is still less expensive than gasoline as it typically trades at a discount of at least 50 cents to that of wholesale gasoline. Also, ethanol has an octane rating of about 113, significantly higher than that of gasoline, which allows blenders to substitute the use of higher-cost octane enhancers that would otherwise be passed on to consumers.
The fact is that corn ethanol is our country’s single largest domestic energy success, and our company is proud that our 50 million gallon-per-year ethanol plant in Shelby is part of that success. This year our industry is on track to produce over 13 billion gallons of ethanol from corn, almost 10 percent of our total domestic gasoline demand. The economic impact of U.S. corn ethanol production dwarfs the $6 billion cost of the blenders credit. For example, most energy market observers agree that the elimination of ethanol would increase gasoline prices at the pump by at least 20 cents per gallon. By directly competing with gasoline in the 140 billion gallon-per-year gasoline market, U.S. ethanol production is saving consumers at least $28 billion per year. This is in addition to the huge impact domestic ethanol production has on our balance of trade and the over 400,000 U.S. jobs directly tied to our industry.
While Big Oil is understandably heavily invested in trying to limit competition from ethanol we hope that the editor can see beyond Big Oil’s talking points, to the people of Western New York, who are enjoying the benefits of domestic ethanol production including lower fuel costs, a strong agricultural economy, and....
