RFA Calls for Fairness at FAO Conference

As talks are beginning in Rome about the factors behind and solutions to world food price inflation, RFA President Bob Dinneen called on world leaders attending the summit to consider the issue in its entirety. This Ethanol Report features his comments.

You can subscribe to “The Ethanol Report” by following this link.

Or you can listen to it on-line here: Ethanol Report 14 (6:29 MP3 file)

Memorial Day Savings at the Pump in Coffee

This Memorial Day weekend many motorists may be wistfully remembering the days of $2 a gallon gasoline as prices at the pump may hit $4 average nationwide by the holiday.

The American Automobile Association (AAA) predicts that nearly 32 million drivers will hit the road for the long holiday weekend. However, RFA has some good news. Because ethanol is keeping gasoline prices about 15% lower than they otherwise might be, RFA says the gasoline price savings this weekend alone will amount to over $200 million – enough for 133 million cups of Starbucks coffee.

Governor Ignores Own Study

Texas governor Rick Perry is asking the federal government to cut “skyrocketing” food prices by waiving half of the renewable fuel standard for ethanol made from grain.

The Renewable Fuels Association criticized the governor’s action, saying that reducing the use of ethanol will not appreciably reduce grain prices for livestock producers and food processors in Texas.

“But eliminating 4.5 billion gallons of fuel from the marketplace as the 50% waiver of the Renewable Fuels Standard sought by Governor Perry would do will increase gasoline and diesel prices even more. While this may benefit Texas oil companies, it will certainly hurt consumers in Texas and the rest of the country.”

RFA says that Governor Perry is ignoring the conclusions of a Texas A&M report he himself requested. According to the findings of that study, “relaxing the RFS does not result in significantly lower corn prices.” The Texas A&M report also stated that, “The underlying force driving changes in the agricultural industry, along with the economy as a whole, is overall higher energy costs, evidenced by $100 per barrel oil.”

Responding to Governor Perry, Renewable Fuels Association President Bob Dinneen issued the following statement:

“Tampering, adjusting or removing the requirements will not have the impact on grain prices that Governor Perry seeks, nor will it bring the food price reductions he claims. The skyrocketing price of oil, surging global demand for grains and meat, poor harvests around the globe, and a weakened US dollar are the real factors determining world grain and food prices. The production and use of ethanol, while increasing demand for corn, is not contributing significantly to food price escalation. It is, however, helping to keep and oil prices lower than they might otherwise be.

“I strongly encourage Administrator Johnson to recognize that oil dependence and the high prices we see today play a far greater role in the complex issue of food prices than ethanol does and to roundly reject the waiver application by the state of Texas.”

Ethanol Industry Getting Even Greener

A new analysis of America’s ethanol industry shows dramatic efficiency gains in ethanol production have been made in the last five years.

According to an analysis conducted by the Argonne National Laboratory, American ethanol facilities are using less energy and water than just five years ago while producing more ethanol. Water consumption is down 26.6 percent, grid electricity use down almost 16 percent and total energy use almost 22 percent lower. (Read the full report from Argonne in pdf form here)

The Argonne analysis compares ethanol industry data from 2001 to 2006. In 2001, U.S. ethanol production was 1.77 billion gallons. In 2006, U.S. ethanol production was 4.9 billion gallons, an increase of 276%.

“This is not your father’s ethanol industry anymore,” said Renewable Fuels Association president Bob Dinneen. “As the industry has grown over the past several years, we have adopted new technologies, we are looking at new feedstocks, we are becoming more efficient every day. The ethanol industry takes its responsibility as stewards of the environment very seriously.”

The Argonne analysis also found key trends that are making ethanol more efficient and environmentally friendly. Nearly 25% of ethanol producers today are capturing their carbon dioxide emissions for use in dry ice production and carbonated beverage bottling. In addition, 37% of distillers grains – the high protein livestock feed co-product of ethanol production – are now sold in the wet form, reducing the energy needed to dry and transport the product.

The improvements being made in ethanol production today signal the greener direction in which this industry is moving. The development and implementation of new technologies that improve efficiencies and expand the basket of feedstocks available for ethanol production is occurring rapidly, as the Argonne analysis indicates.

Conversely, the petroleum industry is moving in the opposite direction. As all of the ‘easy’ reserves of oil have been exploited, oil producers are having to drill deeper and go further into environmentally sensitive lands in pursuit of crude. The environmental impacts of these activities are far greater than even today’s petroleum production.

News Flash - Saudis Denounce Ethanol

In an unpredictable twist, Saudi Arabia’s Minister of Petroleum and Mineral Resources is denouncing ethanol as an alternative to petroleum-based motor fuels.

During an appearance in Paris, Minister Ali bin Ibrahim Al-Naimi said:

“Let’s be realistic, ethanol and biofuels will not contribute to the protection of the global environment by reducing (carbon dioxide) emissions, they will not increase energy security, nor will they reduce dependency on fossil fuels to any appreciable degree.”

All sarcasm aside, Minister Al-Naimi’s dismissal of ethanol is just the latest in a long line of similar remarks by those in control of the world’s oil resources. Clearly, the fact that the Energy Information Administration (EIA) estimates that increased ethanol use will help reduce US petroleum consumption 90,000 barrels per day in 2008 is beginning to strike a nerve.

Responding on behalf of the US ethanol industry, Renewable Fuels Association President Bob Dinneen challenged Minister Al-Naimi’s assertions about the energy, economic and environmental impacts of ethanol.

“For the Saudi Oil Minister to assert that biofuels are not an effective energy alternative is no different from the wolf complaining that Little Red Riding Hood was interrupting his dinner plans,” Dinneen wrote. “As a leader of a country that opposes strict limits on carbon emissions and favors continued expansion of petroleum production, it is not surprising that you express opposition to the development of biofuels.”

“What is also galling about your statement is the claim that biofuels negatively impact the ‘food market.’ The evidence demonstrates that the number one negative impact on the food market is the high price of your primary export – oil,” he continues. “One hundred dollar per barrel oil has driven up the cost of everything from fertilizer to diesel oil used to transport food, to plastics used in food packaging.”

Read Dinneen’s full letter here.

Half-Baked Claims

Recently, the American Bakers Association and other food processing groups have erroneously and disingenuously blamed ethanol for the rise in prices for all foods. Specifically, the bakers have cooked up a line that American farmers are now planting more corn for ethanol production at the expense of wheat acres. However, the National Agricultural Statistics Service (NASS) notes that 2007 saw the highest number of wheat acres planted in the past four years. Farmers planted more than 60 million acres of wheat last year, up more than 3 million acres from 2006. (Source: NASS Crop Production 2007 Summary report)

The two major factors driving the wheat market today are the consecutive droughts in Australia, a leading wheat producer and exporter, and growing global demand. As David Streitfield noted recently in an article in the New York Times, “Now [wheat] prices have more than tripled, partly because of a drought in Australia and bad harvests elsewhere and also because of unslaked global demand for crackers, bread and noodles. In seven of the last eight years, world wheat consumption has outpaced production. Stockpiles are at their lowest point in decades.”

“The idea ethanol production is the driving factor behind high wheat prices is half-baked,” said Renewable Fuels Association President Bob Dinneen. “American farmers increased their wheat production in 2007 at a time of poor harvests and surging demand around the globe. To single out the American ethanol producer ignores the facts.”

Fact Checks

In conveniently coincidental attempts to discredit the benefits of domestic renewable ethanol production and use, representatives from the nation’s petrochemical, corporate livestock, and food processing industries have made frequent public statements disparaging America’s farmers and ethanol producers.

Recent comments by corporate officers from Valero, Pilgrim’s Pride, Tyson’s, Smithfield and others have portrayed ethanol as the primary cause of rising commodity and food costs. The rush to make ethanol the scapegoat for all these ills completely ignores the complexities of world agriculture and energy markets and the many factors behind higher food prices, not the least of which is the record price of oil.

“To put the blame for rising commodity, food and energy prices solely at the feet of the American ethanol industry is misleading and diversionary,” said Renewable Fuels Association President Bob Dinneen. “This kind of overheated, chicken little rhetoric is meant to distort the truth and deliberately misinform the American public. Fortunately, the American people see through these smokescreens and understand that this nation must break its addiction to oil. The consequences of failing to do so, like record oil prices well in excess of $100 barrel, are too great. Biofuels like ethanol represent the beginning of that long journey.”

Some examples of the phony claims being made by officials from these industries include: (more…)

Groundbreaking Move in Petroleum Birthplace

The state that started the move toward petroleum is now joining the movement to help reduce our nation’s addiction to oil. With the cooperation of the state of Pennsylvania and the full-throated support of Governor Ed Rendell, BioEnergy International is breaking ground on the state’s first ethanol biorefinery.

Located in Clearfield, the facility, once completed, will produce 110 million gallons of ethanol annually. Beginning as a corn-based ethanol production facility, BioEnergy will also conduct onsite research and testing to integrate cellulosic ethanol production technology into its operations. Cellulosic ethanol production is the conversion of nonfood biomass materials such as switchgrass, corn stalks, wood chips and other agricultural waste materials into fuel ethanol.

“It is apropos that the state that gave birth to the petroleum industry is now front and center in our nation’s efforts to reduce our dependence on imported oil,” said RFA President Bob Dinneen. “Led by Governor Rendell and the forward-thinking leaders of the state, Pennsylvania is poised to capitalize on the productivity of its farmers to supply a wide range of feedstocks for an ever-evolving domestic ethanol industry. As a result, rural Pennsylvania will see the kind of economic opportunities witnessed by countless small communities across the country and our nation will be another step closer toward energy self-sufficiency. I congratulate Governor Rendell, the people of Pennsylvania, and BioEnergy International for working constructively together to bring the benefits of ethanol production to mid-Atlantic.”

Ethanol Turning Tide of Oil Dependence

The latest report from the Energy Information Administration (EIA) concludes that ethanol will reduce U.S. petroleum demand by 130,000 b/d in 2008.

According to the EIA’s Short-Term Energy Outlook:
“The slowing economy combined with high petroleum prices is expected to constrain growth in U.S. consumption of liquid fuels and other petroleum products to just 40,000 barrels per day (bbl/d) in 2008. After accounting for increased ethanol use, U.S. petroleum consumption falls by 90,000 bbl/d.”

This news from EIA comes at a time of decreasing U.S. petroleum production and an unabated rise in world oil prices that shows no sign of slowing down. Continued geopolitical instability, growing demand from emerging nations like China and India, and a weakening dollar are all contributing to the meteoric rise of oil prices. EIA estimates crude oil will average $94 a barrel in 2008, up from $72 a barrel in 2007.

“America’s ethanol industry is living up to its end of the bargain by helping reduce petroleum use and moderate prices for Americans at the pump,” said Renewable Fuels Association President Bob Dinneen. “The nearly 8 billion gallons of ethanol being produced on an annual basis today is a vital component of our nation’s gasoline supply, adding volume and helping to mitigate the price increases that will occur as oil continues its meteoric rise.”

White Energy Grand Opening

RFA congratulates White Energy on the celebration of the grand opening of their 100 million gallon per year ethanol biorefinery near Hereford, Texas Saturday. The facility will employ 40 full-time employees and use 36 million bushels of corn and milo per year, almost all of it grown locally.

“Expanding ethanol production outside the traditional areas is critical to the continued growth of this industry,” said RFA President Bob Dinneen. “No longer are Midwesterners the only Americans to realize the benefits of renewable fuels. Texas is now moving beyond the petroleum industry towards a more sustainable energy future. Congratulations to White Energy and the people of Texas on beginning production at this new facility and for their commitment to helping set America on a path toward greater energy independence.”

The more than two million head of livestock in the area will also benefit from the ethanol plant. The plant produces more than 830,000 tons of distillers wet grain, a co-product of the ethanol process. Distillers grains are a nutrient-rich animal feed returning value and supply back into the feed markets.

In addition to this newest plant, White Energy owns and operates two ethanol production plants: a 50-million-gallon plant in Russell, Kansas and a 110-million-gallon plant scheduled to begin operation in 2008 in Plainview, Texas.