News

Without ethanol, gasoline prices would be even higher

The debate over ethanol and renewable fuels in this country has sparked substantial interest, debate and concern. As a former member of the California Assembly, and as the former executive director of the Planning and Conservation League, I am familiar with hearing two very different sides to the same story. In that vein, it has become fashionable to blame everything from high gas prices to high food prices on the production of ethanol. Those arguments, to be generous, are an exaggeration.

The fact is that while ethanol may not be the single, or even best, solution to our country’s long term energy problems, it is a big part of the solution today. The use of ethanol in the United States is energy efficient, cleaner for the environment, saves Americans money and reduces our dependence on consumption of foreign oil.

Like most people, I’ve heard the arguments about ethanol’s carbon footprint. Factually, and unlike fossil fuels, ethanol takes far less energy to produce than it provides. It takes seven-tenths of one unit of fossil energy to make one unit of ethanol, while it takes one and a quarter units of fossil energy to make one unit of petroleum gasoline. A 2004 United States Department of Agriculture study concluded that ethanol yields 67 percent more energy than is used to grow and harvest the grain and process it into ethanol.
The growth of ethanol production in the United States is stretching the supply of gasoline, cutting oil imports, keeping billions of dollars here at home, and has some impact on restraining rising gasoline prices.

Congress recently passed an energy bill to generate 36 billion gallons of ethanol in 2022, including 21 billion gallons derived from wood chips, switch grass, municipal waste and other cellulosic materials.

This will make ethanol production even cleaner while the increasing use of ethanol will further reduce emissions. As a recent report by the International Energy Agency concluded, the production of biofuels in the U.S. and elsewhere has already displaced over one million barrels of crude oil a day. Because of the production and use of ethanol, in 2007, the U.S. saved $16.5 billion from being sent to OPEC and other foreign producers.

Another popular argument is that ethanol increases food and gas prices. The main causes of higher food and gas prices include accelerating oil prices, growing demand for grain and meat in China and other emerging economies, bad weather in several major crop growing regions, commodity speculation, and the decline in the value of the dollar.

Higher oil prices obviously drive up costs for farming, but they also add to the costs for transporting and packaging food. According to the USDA, 81 cents of every dollar we spend in the supermarket are from costs after crops have been sold to food processors.
While there’s no question we need to move towards using cellulosic materials to produce ethanol instead of corn, the fact is corn-based ethanol production has a very small impact on food prices. In fact, gas prices would be even higher if not for ethanol. According to a 2008 Iowa State University report, the growth in U.S. ethanol production has caused retail gasoline prices to be $0.29 to $0.40 per gallon lower than would otherwise have been the case. According to the Department of Energy, because ethanol has kept gasoline prices from being even higher, the average American household is saving as much as $300 a year.

I know there are arguments to be made on both sides, but let’s not let the perfect be the enemy of the good. We must explore every alternative energy source and understand that moving towards renewable fuels also means taking the time to develop the technologies that will secure a cleaner environment for all of us. Ethanol is a good bridge on the road to a future free of fossils fuels.


Support for Capitol Weekly is Provided by: