In today's edition of the Canary Cage Times, er, the Wall Street Journal editorial page, the esteemed and enlightened thinkers of the Journal chose to attack Renewable Fuels Association President and CEO Bob Dinneen for his audacity to defend the ethanol industry he works for with peer reviewed science.  (Albeit the title of the editorial has absolutely nothing to do with the content.  We are sure that was a simple oversight.) 

Read the Journal editorial: http://on.wsj.com/PqjLd6

Rather than get into detail about the absurdity of the Journal responding to a letter to the editor in response to an editorial with another editorial on the same day as the letter is printed (phew, the explanation is as absurd as the premise), let us focus on the facts.

Read Dinneen's letter that raised such ire at the Journal: http://on.wsj.com/OAcPOh

Economists from Iowa State University and the University of Wisconsin - scornful in the eyes of the Journal for being from fly-over ag country alone - have found that our domestic production and use of ethanol has kept gasoline prices lower than they otherwise would have been.  They have found this to be the case since publishing a peer-reviewed study in 2009.  Their latest finding was that ethanol helped lower gasoline prices by $1.09 per gallon on average in 2011.  This makes a great deal of common economic sense—extending the gasoline supply by 14 billion gallons (10%) is obviously going to have some significant price impacts. Further, ethanol was priced up to $1.00 less than gasoline at wholesale during most of 2011.

Obviously, this did not sit well with anti-biofuel interests and their chief propagandist – the Wall Street Journal editorial board.  They have since attacked the economists behind the study by citing the vitriol of ivory tower thinkers at MIT and UC-Davis whose work has not been peer reviewed or published (incidentally, the MIT and Davis authors don't dispute the fact that ethanol reduces gas prices). In any case, if the Journal had taken the time to look at the body of literature on this issue, they would have found that economists from Louisiana State University, Merrill Lynch, McKinsey & Company, and several other public and private institutions have reached conclusions similar to the Iowa State/Wisconsin economists.

In relying on simplistic calculations and pithy commentary, the Journal exposes a fundamental weakness in its thinking – an unbending ideology so anti-American agriculture it refuse to acknowledge reality.

For instance, the Journal says that the driving factor in ethanol over the past few years has been the Renewable Fuel Standard. True, the RFS is a key policy driver helping reduce America's addiction to foreign oil.  However, over the past several years , oil refiners have blended 2.5 billion more gallons than they were required to under the RFS because it made economic sense.  Ethanol is the cheapest source of octane on the market today and the only reliable oxygenate available.  This ethanol consumption above and beyond what was called for by the RFS is, in fact, a key factor in making the RFS an entirely workable and successful program even in the face of a drought like American farmers are enduring today. That's because refiners can meet part of their blending obligation this year by turning in credits from over-complying in past years.

Since 2007, when the expansion of the RFS was passed, America has lowered its dependence on imported oil from 60% to 45%.  A number of factors have played a role in this trend, to be certain, but considering that 80% of the new  fuel produced in America since 2005 has been ethanol, it is clear that America's farmers and ethanol producers are living up to their end of the bargain.

The facts go on and have been repeatedly pointed out to the Journal – though rarely given ink on the page.  America's renewable fuel advocates are under no illusion that pointing out the facts will change the Journal's mind.  It is clear that the editorial writers for Rupert Murdoch are beyond rational thought when it comes to this topic.  However, the American public is smarter than the Journal editorial page gives them credit for and if they take the time to review the facts, rather than rely on the clogged filter of the Journal editorial page, we are fully confident they will realize the issues are far more complex and important than the Journal is willing to acknowledge.

The RFA will be submitting an op-ed and asking for equal time  – not just in the letters section.  Sadly, we will not be holding our breath. 

As always, please don't hesitate to ask if you have additional questions.