Groups Refute Ethanol is to Blame for Gasoline Prices
WASHINGTON, April 19, 2006 – Farmers are crying foul because some news media reports have suggested ethanol supply and cost are the culprits for higher gasoline prices.
Ethanol should not be blamed as a major reason that gasoline prices are high and likely to go higher this summer, noted a panel of leaders familiar with the farmer-based ethanol industry. A media teleconference was organized by the American Farm Bureau Federation and held Tuesday afternoon
“I’ve got corn growers from all over the country calling, and they are mad,” said Jon Doggett, vice president of the National Corn Growers Association.
AFBF President Bob Stallman reinforced Doggett’s comment. He said AFBF arranged the media session because so many Farm Bureau members are upset about being blamed for high gasoline prices.
“We represent agricultural producers, and agricultural producers have a huge stake in the energy equation,” said Stallman. First, farmers use large amounts of energy to produce their crops, and second, farmers are producers of renewable fuels including ethanol, biodiesel and biomass, he said.
Stallman highlighted an Energy Information Administration statement that the use of ethanol, replacing the additive MTBE, will account for only pennies of the price of gasoline, and the high cost of crude oil is the major reason for higher gasoline prices.
Also on the teleconference panel was Bob Dinneen, president and chief executive officer of the Renewable Fuels Association. He said tight supplies of gasoline should not be blamed on ethanol either. “There will be sufficient ethanol to replace MTBE in any market where it is needed,” Dinneen asserted.
Dinneen said the petroleum industry had time to plan for the transition from MTBE to ethanol and arbitrarily chose to switch during early May, a time when gasoline demand traditionally increases because of summer travel.
To meet ethanol demand, U.S. ethanol production is ramping up rapidly. Ninety-seven facilities are producing ethanol and 35 more are under construction. The new plants will add 500 million gallons of production capacity before July and another 900 million gallons more during the fall. Additionally, as much as 207 million gallons of tariff-free ethanol can come into the U.S. through the Caribbean Basin Initiative trade agreement, Dinneen said. Last year the U.S. imported a total of about 130 million gallons of ethanol – both from the Caribbean and Brazil.
All three panel members were adamant that there is no need for Congress to suspend the tariff on Brazilian ethanol. “It is not necessary to ask U.S. taxpayers to subsidize already subsidized product,” Dinneen said. He noted that current tax incentives for the petroleum industry provide an incentive for blending ethanol with gasoline, no matter the origin of the ethanol (domestic or imported), and Brazil already highly subsidizes its ethanol industry.
A 50-cents-per-gallon ethanol price change would, at most, result in a 5-cent-per-gallon change in the price of gasoline, Dinneen said; therefore, removing the tariff would do little other than increase U.S. dependency on foreign energy.
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| Contacts: | Tracy Taylor Grondine (202) 406-3642 tracyg@fb.org |
Richard Keller (202) 406-3640 keller@fb.org |
