Food Vs. Fuel Is Illegitimate Competition
(And a 40¢ Whack on Pump Prices)

NPRA's Charles Drevna is telling us directly that since fuel ethanol's true energy-corrected price is $6.67 gal., its cost this year is $31 billion, and it is hiking prices of many foodstuffs while supplanting non-corn crops, the ethanol lobby's charges that the oil industry isn't passing through "cost benefits" to consumers is ludicrous damage control. (See news release 9/28/07, NPRA, 202-457-0480.)

According to this math, 10% ethanol blending equates to a 40¢ gal. penalty on the price of gasoline.

 

Some three decades ago, long before the 2005 energy bill that mandated the corn derivative's sales, my father/company founder Dan Lundberg warned that ethanol would "mine the soil" and compete for food growing resources around the world. Although mining the soil might not be as valid a concern given modern farming, the competition with food is a true threat today. And it was BP, in the form of its American acquisition Amoco, that most championed the fight against tax subsidies and forced use of ethanol, via extensive research on true cost, inferior energy content, etc. Those days are gone, and the threat has grown. But the wholesale rip-off of consumers hoodwinked into believing the story of ethanol as gasoline supply "solution" is finally becoming widely known, and there's a backlash brewing.

If the lobby succeeds in growing the sales mandate, many developing country populations will pay in food prices and public resources, as they are already flooding the likes of the World Bank for loans to produce biofuels (in part to feed a hoped-for rabid appetite, albeit contrived, in the U.S.). Cost passthroughs in the U.S. are affecting foodstuff prices internationally, not just here.

The American ethanol lobby's excuses for being have been numerous, seizing on whatever political issues are in fashion, but the purpose has always been a rigged free ride without regard for any consequences. It has added environmentalism and War on Terror claims, and these two are just as faulty as all the prior claims.

I hope that NPRA's guts, considering that it represents the disrespected petroleum industry, stays tough and its members regain stand-up pride in supplying the best and least costly economic and strategic energy source. Preventing an expansion of the biofuels sales mandate just might lead to an eventual cancellation of the anti-consumer sales mandate, period. Lobbyists, politicians, and farmers are consumers too.