 By LANCE GAY Scripps Howard News Service July 14, 2005
On the surface, it looks like a win-win proposal. The ethanol industry, which currently produces 4 million barrels of fuel for American cars each year, says boosting ethanol production is an obvious way to achieve greater U.S. energy independence. Environmentalists, who don't like fossil fuels and would prefer to take gas-guzzlers off the highway, say that at least ethanol is a renewable energy source and burns cleaner than gasoline. One consumer group says using more ethanol would cut per-gallon prices that drivers are paying at the pump. Farmers responsible for the 1.4 billion bushels of corn put into ethanol last year could not be more pleased to find an expanding market for their crops. Then there's David Strom, president of the Taxpayers League of Minnesota, who says ethanol is nothing more than "a grand scam." Strom said his argument against ethanol is simple: If there weren't government subsidies, there would be no ethanol market. In his view, the ethanol industry would collapse if it weren't for the 53-cent federal subsidy, which comes because the government does not charge fuel taxes on ethanol. The subsidy costs taxpayers $1.4 billion a year, and some states add their own subsidies from state fuel taxes. Strom also argues that ethanol is an odd way of trying to make America independent of oil imports, because it requires a tremendous amount of energy to distill corn into gasoline. It's difficult for man to replicate the natural processes that made crude oil, he said. "There's a lot of work done by chemistry and time." How much energy is used to make ethanol is hotly debated. David Pimental, a Cornell University professor, says ethanol's promise as an alternative fuel is overstated. Pimental says that in adding up the gasoline used to run tractors to seed and harvest the corn, and in trucks taking the corn to processing plants, along with the energy costs of transforming the corn into ethanol, it actually requires 29 percent more than a gallon of imported oil to produce each gallon of ethanol. The U.S. Department of Agriculture disagrees. In a 2002 report it said that a gallon of ethanol contains 34 percent more energy than is used to grow and harvest the corn and distill it into ethanol. Brian Jennings, executive vice president of the American Coalition for Ethanol, acknowledged that making ethanol is an energy-intensive process, but said it's not fair to include the costs of growing the corn in the equation. "The corn is going to be grown anyway, and fed to livestock or used for human purposes, and so there has to be a fair way of assessing its costs," he said. Strom and other critics contend the energy bill Congress is considering represents another giveaway to the corn industry. But Jennings said that is not necessarily the case, noting that the industry will have to use other products like sugar cane or sorghum to achieve the scope of production Congress envisions. "The legislation has demonstration projects for making ethanol from other than corn," he said. A Senate-passed provision in the energy bill, currently before a House-Senate conference committee, proposes the United States double current ethanol production to 8 million gallons a year by 2012. Jennings said the industry believes that goal is "easily capable" of being met. Jennings said increased ethanol could result in lower prices at the pump. With wholesale prices for ethanol currently at $1.20 a gallon and oil selling for more than $60 a barrel, the Consumer Federation of America says that requiring the oil industry to use a 10 percent blend of ethanol would cut per-gallon prices at the pump by 8 cents. "The bottom line is that blending cost-effective ethanol with high-priced gasoline brings down the overall cost of the fuel for consumers," Jennings said.
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