America’s reliance on foreign oil is causing a transfer of the nation’s wealth that is truly frightening, given the sudden surge in price this year.
When we have no choice but to buy gasoline at new high prices, a major share of that money ends up in the hands of sovereign entities overseas. Yes, among those who welcome these billions of dollars are unfriendly governments in Iran, Venezuela and Russia. Compounding the liability in this massive transfer of American dollars is enormous defense spending to protect American interests in the world oil supply.
Fortunately, America has assets to combat the situation. In addition to our great technology and entrepreneurial skills, the bounty of American agriculture can be tapped to leverage ourselves into a better position on transportation fuel, currently the largest use of crude oil in the U.S. In fact, the production of ethanol from corn is already making a nice start toward having clean biofuels shoulder a modest but promising share of the domestic motor fuel supply.
This has been accomplished by utilizing only a part of the huge corn supply produced in this country. In 2007, American farmers produced over 13 billion bushels of corn, more than 2 billion bushels higher than the previous year. Of that increase, only one-third was needed to accommodate the increased demand for corn-based ethanol. America’s corn production is so enormous that we routinely have to export 17 to 20 percent of it and put another 8 to 10 percent of it into temporary storage because production each year always exceeds domestic use.
Having 8 billion gallons of annual ethanol production now as an extender to the gasoline supply (mostly as a 10 percent blend) saves money for consumers. Why? Because when oil doubled in price this year from $60 a barrel in 2007, the ethanol component displaced the more expensive alternative.
A bonus is on the environmental side — a field of corn absorbs carbon dioxide from the atmosphere, it burns cleaner than gasoline, and has little risk of pollution if accidentally spilled. Despite claims to the contrary, ethanol is a net energy provider as it fits neatly into existing gasoline supply infrastructure.
There are skeptics around who offer misleading commentary about ethanol and biofuels. They falsely claim that ethanol is the principle cause for the rise in the price of food, for example. This is a myth. Food inflation now is about 5 percent annually, which is slightly above recent annual norms of 2-3 percent. That recent increase, however, is mostly attributable to this notorious oil price surge and other non-agricultural factors that comprise 81 percent of the price you pay for food.
We believe that corn ethanol will stand as a steppingstone for future innovations in the development of cheaper, biomassbased feedstock. In the meantime, we think we are better off paying our farmers for corn made into ethanol than sending those dollars overseas to our adversaries.
Richard Nieuwenhuis
President
New Jersey Farm Bureau
Trenton