Without corn ethanol, we’d really be paying at the pump
By Randy Uhrmacher
A corn grower from Juniata, Randy Uhrmacher is president of the Nebraska Corn Growers Association. For additional information, and links to reports referenced in this article and more, go to www.necga.org.
The corn and corn ethanol industries have been in the news a lot lately. The focus of much of this attention has been negative, with individuals and groups trying to tie a line between the production of corn ethanol and higher food prices and what some are calling a food crisis.
The truth, however, is considerably more complex and includes everything from a drought in Australia to a weak U.S. dollar. We need to be careful in the discussion and analysis of these issues when placing blame on biofuels like corn ethanol. Attempts to turn back the clock on ethanol will cause considerable damage to the existing industry and will threaten the opportunity for more investment and technology in future biofuels development. This “throwing out the baby with the bath water” scenario is very real – and very scary considering the main proponents are backed by companies and organizations that make a living selling oil.
In fact, oil companies have done quite nicely for themselves lately and can more than afford to push agendas through assorted groups and individuals who respond to greenbacks instead of a green fuel. Exxon alone had a profit of $40.7 billion last year and makes no apologies for it. The five leading oil companies combined for profits of $123 billion. Compare that to the $32 billion gross value of the entire 2006-07 U.S. corn crop.
The conclusion of studies examining corn’s impact on food prices are fairly clear: Minimal. This is because corn makes up only a small part of food products that it is used in – from 10 ounces of corn in a 12-ounce box of corn flakes to 3.6 pounds in a 1-pound package of pork. Considering there is about 56 pounds of corn in a bushel, even at $5 corn that box of corn flakes only contains 5.6 cents of corn.
What has a much bigger impact on food prices is the same thing we shake our heads over every time we pull into a gas station: skyrocketing oil, gasoline and energy prices. If the price of corn flakes moves up 50 cents, the bulk of that price increase is attributable to processing, transportation, labor, other costs and a profit margin by the company that makes and distributes it. Corn’s role is minimal, and it seems an even further stretch to blame biofuels.
We need to keep in mind the real common denominator for high gas prices, higher food prices and all the misinformation being spread about the corn industry and ethanol. With the oil cartel OPEC suggesting that oil prices could reach $200 per barrel, the idea of foregoing corn ethanol because of misplaced blame would be a disaster. We’d only be left with more of the same. We’d have no alternative for fueling our cars and no way to help keep prices down at the pump.
The simple truth is, if it weren’t for biofuels like corn ethanol, we’d be paying considerably more at the pump, and transportation and processing costs for food companies would be even higher than they are today. Iowa State researchers estimated that without ethanol, gasoline would be 29-40 cents per gallon more than it is today. Merrill Lynch reported ethanol lowers gas prices at least 15 percent.
The bottom line is, ethanol is saving consumers billions of dollars. At the same time, its providing thousands of jobs in rural communities, providing numerous environmental benefits and is helping pave the way for biofuels of the future. The best part? It’s available today!
