Posted on: August 23, 2013 in Corn prices, Ethanol, Oil, Renewable Identification Numbers, Renewable Fuel Standard

Let’s get a few things straight. The Wall Street Journal has never liked ethanol and has probably written more editorials opposing ethanol than on most other issues. The latest diatribe (“Put a Corn Cob in Your Tank,” 8/16/2013) comes as no surprise.

As in previous editorials, the Journal is long on opinion and short on fact. Let’s look at a few items the Journal ignores or denies:

Ethanol reduces prices — With recent reductions in corn prices, ethanol now costs 68 cents a gallon less than gasoline. This cost savings is in keeping with the conclusions of a study by economists at the University of Wisconsin and Iowa State University, which found that, in 2011, ethanol reduced wholesale gasoline prices by $1.09 per gallon nationally.

Oil raises food prices, not ethanol — Contrary to the fiction propagated by the Journal blaming higher food prices on ethanol, a recent study by the World Bank concluded that the primary driver of high food prices worldwide has been higher oil prices. Further, the cost of corn, while higher, remains a small component of America’s food bill.

Oil gets subsidies, not ethanol — While subsidies for oil and gas average $4.86 billion per year, the Renewable Fuel Standard (RFS) is simply a guideline requiring gasoline blenders to use increasing amounts of renewable fuels.

Oil companies pay no fines under the RFS — RFS offers credits for years refiners and blenders use more biofuels than the standard requires. The Journal claims that trading these credits raises the price of gasoline. Nonsense. Credits are traded among oil companies; they don’t raise consumer prices.

Bottom line — ethanol and other biofuels compete with oil, but the Journal and Big Oil would rather have the status quo.

Bob Dinneen
President and CEO, Renewable Fuels Association

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