Biofuels have become an essential component of the world’s motor fuel supply, according to a report released today by the International Energy Agency (IEA).
IEA estimates that biofuels will account for nearly two-thirds of the non-OPEC oil supply growth this year, or more than 1.5 million gallons per day.
“While it seems unlikely that biofuel targets will be reversed in the near future, it is sobering to realize the amount of oil that would be needed to replace them,” the IEA report said.
According to the report, replacing the global supply of ethanol and biodiesel-based biofuels added to the U.S. and European markets since 2005 would require an additional 1 million barrels of crude oil to be processed per day.
Read stories from Bloomberg and Dow Jones.
RFA President Bob Dinneen says the report points out the importance of ethanol production. “In the face of record oil, gasoline and diesel prices, it might seem pennywise but would be pound foolish to walk away from our commitment to biofuels and a diversified energy future,” he said.
Sen. John Thune (R-SD) plans to introduce a bill this week that would let buyers of cars or trucks capable of running on up to 85 percent ethanol enriched fuel claim a $1,000 tax credit.
Thune says we can’t conserve our way out of our dependence on foreign oil, “We’ve got to start taking steps to diversify our fuel supply.”
According to an AP story out of Sioux Falls, Thune’s bill would allow consumers purchasing an optimum flexible fuel vehicle - which runs on E-85 with an improved fuel economy similar to that of a gasoline-powered ride - to claim a $1,500 tax credit.
Thune, who was among a bipartisan group of Senators that sent a letter last week to Environmental Protection Agency Administrator Stephen Johnson supporting the Renewable Fuels Standard (RFS), says his legislation would encourage consumers to buy more flex-fuel vehicles, which would in turn increase demand for E-85 and blender pumps.
In case you don’t have time to the entire one hour press conference from last week, here’s a six minute summary. This “Ethanol Report” podcast features comments from the four agriculture and ethanol industry leaders who participated in a press conference on April 30 about the role of biofuels in food price increases. Featured are former Agriculture Secretary John Block, National Corn Growers Association CEO Rick Tolman, National Farmers Union president Tom Buis and RFA president Bob Dinneen.
You can subscribe to “The Ethanol Report” by following this link.
Or you can listen to it on-line here: 
Ethanol Report 12 (5:45 MP3 file)
It was publicity hound P.T. Barnum who is credited with the quote “I don’t care what they say as long as they spell my name right.” Wonder if his name was as hard for the media to get right as “Dinneen.”
Bob’s name is frequently spelled “Dineen” by the media - like this recent Reuters story. Now seriously, they could spell Urbanchuk right but not Dinneen?
When I was in Journalism school back in the old days, it was considered a major fact error to get someone’s name wrong. And in today’s world of the internet, double-checking is just a click away.
In fact, the article was written by one person and edited by another. Someone should have been able to check.
The good news is, it was a positive article making RFA’s point that a waiver of the RFS would increase gasoline prices even more. So, in this case, Bob probably doesn’t care that they spelled his name wrong - the message was more important.
Update: Just noticed that the AP story on today’s hearing about the RFS by the House Subcommittee on Energy and Air Quality also spelled Bob’s name wrong, even though it is spelled correctly on the witness list. Sorry, but as a journalist that really bothers me.
The media was very interested in hearing the story that agriculture and the ethanol industry had to tell about food prices during a press conference Wednesday at the National Press Club.
Former Agriculture Secretary John Block, National Corn Growers CEO Rick Tolman, National Farmers Union president Tom Buis and RFA’s own Bob Dinneen gave opening statements about the facts on food price increases and entertained about 40 minutes of questions from reporters present and on the phone. They covered nearly every topic on the ethanol waterfront and gave highly informative answers to probing and intelligent questions from the press. Hopefully this will translate into some balance in reporting about the food versus fuel issue.
It’s a big file and may take a while to load but you can listen to the entire one hour plus press conference here: Food Price Press Conference (1 Hour MP3 file)
You can see an online photo album from the press conference here: RFA Press Conference Photo Album
Updated with recorded video
Today at 1pm eastern time, RFA is hosting a press conference at the National Press Club. In attendance will be:
The Honorable John Block, former Secretary of Agriculture
Tom Buis, President, National Farmers Union (NFA)
Bob Dinneen, President of the Renewable Fuels Association (RFA)
Rick Tolman, CEO, National Corn Growers Association (NCGA)
The topic will be: “Farmers and Ethanol Industry to Present the Facts On Food Price Increases.”
We are working to try and stream the press conference live on on UStream.tv using the player below. At the time of the conference, you should be able to click on the player and see the live stream. This is an experiment, so we will see how it works. Regardless, we are recording the conference and will have a full update available here afterward.
Update: The live stream worked! Here is a recording of the first 20 minutes or so:
This was the first time we used this new streaming service. It recorded in segments so here’s another segment which takes you through all the opening statements.
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.
“Replacing the 4.5 billion gallons of fuel Governor Perry seeks to remove from the marketplace would come at great expense to Americans from all parts of the country. Given that America’s gasoline refiners continue run their refineries at far below capacity and oil prices show no signs of abating, it rapidly becomes clear that removing this volume of ethanol would send gasoline and diesel prices far higher than we are seeing today. In other words, Governor Perry’s approach is a surefire way to guarantee even higher gasoline prices.
“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.”
Two reports out this week on ethanol show the economic and environmental benefits of ethanol.
The Missouri Corn Merchandising Council released a study done by John Urbanchuk with the economic consulting service LECG that finds drivers in Missouri can expect to save an average of 9.8 cents per gallon this year due to the 10 percent ethanol standard that went into effect Jan. 1, 2008. That works out to $73 for every motorist in the state.
“With petroleum industry profits of $123 billion and fuel prices spiking 40 percent in the last four months, the pain at the pump is getting intense,” said Jayne Glosemeyer, Missouri Corn Merchandising Council chairwoman and farmer from Marthasville, Mo. “The implementation of the Missouri Renewable Fuel Standard, blending the state’s gasoline with 10 percent ethanol, is the one thing helping to ease the pain. It is keeping money in consumers’ pockets and keeping dollars here at home.”
A pdf file of the study report is available here.
On the environmental side, the Ethanol Promotion and Information Council celebrated Earth Day by informing consumers that if every car in America would use a ten percent blend of ethanol for one week, the amount of greenhouse gases produced in the U.S. would be reduced by nearly 1.3 billion pounds.
According to calculations done by researcher Nathan Danielson, president of BioCognito, filling up with E10 can reduce greenhouse gas emissions by 9.5 pounds per tank.
“Ethanol is just a very good fuel for reducing overall carbon foot print,� Danielson said. “The story gets better if we go to E85. If we get to E85, all the sudden you are sitting at about 90 pounds of carbon dioxide that you’ve removed from the atmosphere by using ethanol instead of gasoline.� Everyone filling their tanks with E85, he says, would reduce greenhouse gas emissions by nearly 12.4 billion pounds in one week.
Better still, Danielson says that the same situation using ethanol derived from cellulose could reduce greenhouse gases by 282 pounds per car per week, or 38.5 billion pounds a week if used by every car on the road.
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.â€?
“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.â€?
Read Dinneen’s full letter here.
Renewable Fuels Association spokesperson Matt Hartwig was interviewed this week for the National Association of Farm Broadcasting news service about the USDA Prospective Planting report and what it means for ethanol production.
Matt said the report, which forecasts 86 million acres of corn, shows that progress being made toward the goal of producing 15-billion gallons of corn ethanol by the year 2015.
“Most look at a scenario in the year 2015 where the American farmer will produce 15 billion bushels of corn,” Matt said. If the ethanol industry can produce three gallons of ethanol per bushel, that will mean using about one third of that crop to make 15 billion gallons of ethanol.
This year, if farmers only plant the 86 million acres forecast, production should be over 12 billion bushels. “And with carry-in of about 1.5, you’re looking at 13 to 13.75,” Matt says.
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