Attacks on the Renewable Fuel Standard have begun again in earnest. Following a recent U.S. Environmental Protection Agency (EPA) decision not to waive the Renewable Fuels Standard (RFS), the usual suspects are lining up again to blast our nation’s major effort to ramp up renewable fuels production, reduce our dependence on foreign oil and stimulate the commercialization of advanced biofuels. The RFS mandates the production of 36 billion gallons of renewable fuels by 2022 from conventional as well as advanced biofuels.
Recently, the National Council of Chain Restaurants (NCCR) released a study purporting that ethanol was the culprit behind high food prices in the chain restaurant industry. Not to be outdone, the American Petroleum Institute (API) called for a full repeal of the RFS because it claimed that it is not working and that ethanol is damaging vehicles. AAA even got into the game by warning recently that gasoline blended with 15 percent ethanol, or E15, would damage car’s engines.
Unfortunately, these organizations are dead wrong on a number of issues.
First, ethanol is not to blame for increased food costs. Energy costs, particularly the price of oil, are the main factors in determining food prices, not ethanol or corn. In fact, recent EPA analyses as well as numerous independent studies show that there is little relationship between ethanol production and food prices. Each month, NFU releases its Farmer’s Share of Retail Food Dollar. For instance, in November, bacon sold for $4.83 at retail but the farmer only received $0.84. The retail cost of a box of cereal costs $4.69 in the grocery store while the farmer takes home a humbling $0.10. Where does the rest of the money go? 84 cents of every dollar spent on food go to transportation, marketing, packaging and advertising, which are driven by the price of oil.
Second, regardless of your point of view on ethanol, an informed debate must be driven by sound science. Unfortunately, claims by API and AAA that higher blends of ethanol will damage engines are simply wrong. EPA underwent significant testing before approving the commercial sale of E15 in model year 2001 and newer cars, SUVs, pick-up trucks and vans. These extensive tests were conducted by various stakeholders and coordinated by the U.S. Department of Energy (DOE).
Third, despite claims by API, the RFS is working as it should. The RFS is largely responsible for ethanol comprising 10% of our nation’s fuel supply and reducing prices at the pump. A recent study by Iowa State University found that ethanol saved consumers $1.09 per gallon in 2011. Ethanol has also helped reduce our dependence on foreign oil from 60 percent in 2005 to 45 percent today. It supports more than 400,000 American jobs and generates $53 billion in economic activity each year. Besides, if the RFS wasn’t working, organizations such as NCCR wouldn’t be claiming that ethanol production is driving up food prices.
While special interests bring up the same arguments to attack ethanol whenever it is politically appropriate, U.S. energy policy must focus on the long term and not change based on short-term circumstances. The RFS is the main path forward for the advanced biofuels industry and will continue to help wean our nation off of foreign oil dependence.