Energy, not Ethanol, Responsible for Higher Food Prices

Ethanol’s impact on food prices is negligible, particularly when compared with the impact of energy costs, shows a new study released by LECG, an independent research group recognized worldwide for expert analysis and original authoritative studies. The study by John Urbanchuk of LECG, shows that a $1 per gallon increase in the price of gasoline results in an increase in food prices that is three times as high as a $1 increase in the price a bushel of corn. The study also showed that distiller’s grains, a byproduct of ethanol production and a high quality livestock feed, help put downward pressure on food prices as livestock farmers purchase the grains instead of corn.

“It was about time that a study compared more than just corn prices to retail food prices,” responds Donald Maring, President of the Maryland Grain Producers Utilization Board. “We have all seen a huge increase in our energy costs. It is only common sense to attribute the majority of food cost rising to increases in energy prices for processing and shipping food products.”

Congress looks to curb the growing energy crisis by using America’s farm economy as a source for biofuels, and has mandated the production of ethanol. Auto companies plan to have 8 million flex fuel cars on the road by the end of next year. The Wall Street Journal documented the road blocks that big oil companies put in the way of service stations to limit the sale of E-85 (85% ethanol, 15% gasoline) since it competes with their gasoline. E-85 needs to be available so that drivers can use this cleaner fuel in their flex fuel car, and achieve reductions in oil use and global warming pollution.

Biofuels, liquid fuels produced from agricultural crops and wastes, have the potential to deliver a secure and stable supply of fuel to supplement America’s growing energy demands. Ethanol and biodiesel produced from grain are two of the solutions to U.S. dependence on oil. Other low carbon fuels, such as cellulosic ethanol, hydrogen and electricity, will play a role towards long-term energy independence. Cellulosic ethanol, made from agricultural waste and crops such as switchgrass, looks promising for the future, however, the technology is not yet developed for commercial production.

The United States Energy Information Administration reports that our country consumes 20.1 million barrels of oil per day, 69 percent of which is used for transportation. Of this, 62 percent is used for surface transportation by cars and light trucks. Nearly 40 percent of all U.S. oil imports come from potentially hostile or unstable regimes, and 92 percent of conventional oil reserves are in these nations.

A new survey by Greenberg Quinlan Rosner Research shows an increased demand among Americans for immediate action to achieve energy independence. Americans want clean, alternative energy and U.S. energy policies to see this country move in that direction. Across much of America, farmer-produced renewable biofuels enjoy significant and justifiable public support as a way to reduce oil consumption, support rural economies, and contribute to reductions in greenhouse gas emissions.

“With barrel prices of oil over $90, we need to make every effort to quickly move to alternatives like grain-based fuels,” states Maring. “Changing consumers’ purchases to those that promote improving the environment with renewable resources, support the farm economy, and reduce global warming pollution is a good place to start.”