Imagining a World Without Ethanol
By Rick Tolman
Chief Executive Officer
National Corn Growers Association
When the price of oil hit, and then passed beyond, $100 a barrel, headlines were made. This week, an even more newsworthy headline has surfaced. All it could take is one major disruption and oil can hit $200 a barrel, according to analysts from Goldman Sachs.
And yet, despite the far-reaching impact oil has on our economy, and despite the fact that we are still depending on nations that would be described as somewhat less than respectful of basic human rights, there are people who refuse to recognize corn ethanol for what it is ? a way to reduce our dependence on foreign oil. Right now.
We accept the usual caveats ? corn ethanol is not the solution, but part of the solution. We accept that corn ethanol is not the only biofuel out there. We see great promise in cellulosic ethanol, but we recognize it is just that: promise. Something we need to work on for the future. And a promise we cannot achieve without the contributions of corn ethanol.
For now, corn ethanol is an efficient fuel source that is available, affordable and American. It has decades of research behind it and is growing even more efficient.
But what if we were to stop using it? Well, a few recent reports detail the economic benefits of ethanol.
Recently, at the 25x25 Renewable Energy Summit, Terry Francl, the American Farm Bureau Federation?s senior economist, discussed two financial benefits of ethanol. First off, it reduces the price of a gallon of gas by 5 to 10 cents.
Doesn?t sound like all that much, does it? Nationally, that?s a savings of between $7 billion and $14 billion.
Further, with higher crop prices, federal support for farmers is reduced by $8 billion to $12 billion each year.
Taken together, the savings are between $15 billion and $25 billion. Reduce that by tax credits for ethanol, and you still have a net positive impact of $11 billion to $21 billion.
In its recent report on the economic impact of the ethanol industry, the Renewable Fuels Association found that in 2007 ethanol supported more than 230,000 U.S., jobs, put more than $12 billion into the pockets of American consumers, and generated more than $8 billion in tax revenue.
This is all great news for the American public and worthy of the headlines. But what?s the big headline grabber? It was syndicated writer Walter William? column last week resembling a loose collection of canards and urban legends strung together with a thin and weak thread. For a conservative libertarian, he found it too easy to buy into some the mistruths spread by alarmist fearmongers like Lester Brown.
Sure, these folks want to do away with ethanol. But where would that leave us? At present, there is no viable alternative that looks as good.
A country without ethanol would be a country with more foreign oil ? more expensive gasoline ? and more unemployment.
Sure, we want to be the ?Land of Plenty,? but not the land of plenty problems!
There is no free lunch.
Milton Friedman (1912 - 2006)