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| Consumer group defends ethanol against its critics |
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By JANE HOUIN
Ohio Correspondent MARION, Ohio — Polls show U.S. consumers want to see the development of alternative energy grow. Consumers also want to be able to make choices at the pump. Yet there are two distinct roadblocks in the way.
A study by the Consumer Federation of America titled Big Oil v. Ethanol highlights the roadblocks that currently exist in expanding E85 production and distribution. E85 is a blend of 85 percent ethanol and 15 percent gasoline.
The study said record pump prices are due to a shortage of refinery capacity, not the price of crude oil, and that the industry is contesting the growing support for ethanol because it poses a challenge to the oil industry’s marketing power.
In the study released last month, CFA said U.S. consumers will not be surprised when oil companies begin reporting their financial results for the first half of 2007: record prices will spur record profits. But consumers may be surprised at the reason behind those profits and what oil companies are willing to do to keep earning those profits.
“They may also be taken aback by the brazen attempt of the oil industry to prevent policymakers in Washington from doing anything about the problem,” wrote Mark Cooper, CFA director of research and the study’s author.
“Having systematically failed to increase refining capacity to meet growing and expected demand, the major oil companies have now declared war on a key policy that can help alleviate the shortage - the expanded production of alternative transportation fuels, particularly biofuels, like ethanol.”
“We support the development of new refining capacity,” said Ohio Corn Growers Assoc. (OCGA) Executive Director Dwayne Siekman. “To hear oil companies claim ethanol as the reason they’re not increasing capacity is simply disingenuous.”
Yet oil companies are threatening to scale back modest plans to expand refining capacity, according to Cooper, who cites recent headlines from the New York Times’ front page - “Oil industry says biofuel push may keep gas prices high: Ethanol seen as deterrent to expanding refineries.”
Cooper said keeping the refining sector tight is not the only way “Big Oil” battles ethanol. Because oil companies lose sales every time a driver chooses E85, oil companies use a variety of tactics to keep E85 out of stations all together by requiring franchised stations to purchase all the fuel they sell from the oil company or initiating contacts that limit E85 advertising, restricting the use of credit cards to apply for it, or requiring any E85 pump be located on a separate island and not under the main canopy.
Still, the Senate had voted to institute programs to triple production of biofuels by 2022, adding the equivalent of 2.3 million barrels per day of refining capacity to the U.S. liquid fuel supply.
The second roadblock designed to slow energy diversity with ethanol is the continued misinformation being supplied by those who have become accustomed to inexpensive corn and those that have a vested interested in ethanol’s failure.
“We had no idea that corn producers controlled the entire world market,” said Delaware County, Ohio corn grower John Davis. “Today’s local cash price is $2.96 for a bushel of corn, not $4 like what’s been reported. Corn is not being diverted from food to fuel.”
Livestock uses field corn for animal feed - field corn is the same type of corn used to produce ethanol. Yet a co-product of ethanol is an animal feed called dried distillers grains, which can displace corn as a feedstock.
Food companies have jumped into blaming ethanol for their price hikes, according to the OCGA, which offers these rebuttals:
Corn flakes: Only 3 cents of corn goes into a box of this cereal. The cereal costs anywhere from $3-$4 a box in grocery stores, with the majority of that cost covering labor and marketing in addition to higher transportation costs resulting from rising gasoline prices.
Starbucks coffee: Starbucks said it has to charge even more for its high-priced coffee because dairy prices have gone up as a result of ethanol production. OCGA said this is false. OCGA said dairy prices are up because of increased demand for whey protein in China and because dairy farmers sold off heifers following a time when there was an oversupply of milk.
Meat products: Some of the richest companies in the world sell Tyson chicken or Smithfield Foods’ pork, said OCGA officials, yet these companies complain about rising feed costs while they still experience rising profits. Tyson has benefited from biofuels by selling chicken grease for fuel, according to the OCGA.
Popcorn: Because popcorn is not used to make ethanol, its market price has been affected by dry weather only. Yet OCGA said movie theaters are eager to charge patrons an extra 75 cents for boxes of popcorn that may have cost them 4 cents more during a drought.
Corn tortillas: While many consumers have heard Mexico has experienced a shortage of corn tortillas, OCGA said this is a result of a supply issue of Mexican white corn, not U.S. field corn. Mexican farmers have responded by producing more white corn. U.S. field corn is not used for corn tortillas.
CFA is an advocacy, research, education and service organization. It is comprised of more than 300 nonprofit groups.
This farm news was published in the Aug. 22, 2007 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee. |
| 8/20/2007 |
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