The folly of food as fuel
Special to the Star-Telegram
"Bravo!" to Gov. Rick Perry and U.S. Sen. Kay Bailey Hutchison for recognizing the damage caused to Texas consumers and businesses by the mandatory federal renewable fuel standard for grain-based ethanol.
A growing mountain of evidence reveals the economic and environmental folly of federal ethanol policy. Perry's requested 50 percent waiver and Hutchison's proposed freeze on the renewable fuel standard (RFS) would alleviate the pressure on corn for fuel.
Texas is only beginning to see the rising food prices that federal ethanol policy could generate. Last year's 4-plus percent rise in food prices stems from the 2005 Energy Policy Act. New energy law enacted in 2007 significantly enlarged the RFS. Food prices may increase as much as 8 percent this year. And consider where the largest price increases occurred: eggs, cereal products, sweetened beverages and beef.
All depend on corn-based ingredients or corn feed grains. One-fourth of the 2007 U.S. corn crop was converted to ethanol; the U.S. Department of Agriculture projects that 30 to 35 percent of this year's crop will become ethanol.
The new energy law will force more corn to become fuel. Meeting the 36-billion-gallon RFS mandate in 2022 will require 115 percent of last year's U.S. corn crop.
Texas is the appropriate state to call for a change in federal ethanol mandates. The indirect costs of ethanol hurt Texans in the grocery store as well as key agricultural sectors of the state economy. All animal agriculture uses corn-based feed grains.
Four years ago -- before the RFS -- corn cost $2 per bushel; last year, it was $4. As Perry's letter to the Environment Protection Agency highlights, these higher corn prices cost the Texas economy at least $1.17 billion.
A hefty 51-cent-per-gallon tax credit and a 54-cent-per-gallon import tariff also artificially drive the ethanol boom. The tax credit cost the U.S. Treasury $5 billion in 2006; that will rise to $10 billion in 2012.
The U.S. fuel supply may not be able to absorb the mandated volumes of ethanol. Most of the approximately 240 million U.S. vehicles cannot use gasoline with more than a 10 percent ethanol blend. Perhaps only 6 million are flexible fuel vehicles capable of using 85 percent ethanol (E85). Only around 1,000 of the 172,000 U.S. gas stations -- mostly in the Midwest, close to ethanol production -- can dispense E85.
The Big Three U.S. automakers recently pledged that half of their 2012 vehicles will be flexible-fuel. Yet this amounts to only 2 percent of total vehicles on the road. It takes decades for a complete fleet turnover.
Ethanol is an ineffective means of reducing reliance on imported oil. Domestic production of ethanol doubled between 2003 and 2007; imports of oil and refined gasoline increased. A deficit in refining capacity and an approaching surfeit of ethanol production capacity will not increase the security of our gasoline supply or stability of gasoline prices. What happens to a grain-based fuel supply in a major drought?
Ethanol has two-thirds of the energy value of petroleum-based fuels. A vehicle requires three gallons of ethanol for the mileage of two gallons of gasoline. Would today's consumers choose fuel 30 percent more expensive than gasoline?
Producing one gallon of ethanol may well take more energy than the end product contains. With fertilizer, water, an energy-intense fermentation process and transportation necessarily by rail or truck instead of existing pipeline, ethanol production utilizes much more energy than crude oil to reach the pump.
Although combustion of ethanol involves less carbon dioxide (CO{-2}) and particulate emissions than petroleum-based fuels, ethanol causes more nitrogen oxide emissions -- the main ingredient in ozone formation.
And ethanol may increase net CO{-2} emissions. A February article in Science magazine concludes that the CO{-2} released from converting forest and grasslands to corn crops could amount to a doubling of CO{-2} emissions from these lands. Millions of acres long enrolled in the USDA Conservation Reserve Program have been tilled for corn. Intensive fertilization and irrigation affect water quality and supply.
Perry and Hutchison deserve praise for recommending solutions.
RISING COSTS
How much have retail prices increased in the past year?
Eggs: 29 percent
Cereal products: 6.5 percent
Sweetened beverages: 4.5 percent
Beef: 4.4 percent.
