Grain Bins


SDCGA admonishes using RFS as a campaign pawn

Posted on May 05, 2008

At a time when America is searching for answers to rising energy and food costs, the one solution already in the pipeline and making a difference – ethanol – is under attack. The South Dakota Corn Growers Association (SDCGA) calls an effort to seek a waiver from the Renewable Fuels Standard irresponsible and damaging to American consumers.

A group of 22 Senators, including presidential candidate John McCain, sent a letter to the Environmental Protection Agency asking them to consider waiving the RFS in light of escalating food prices. The action impedes the nation’s efforts to become energy independent.

Mere months ago, the RFS package passed Congress with an overwhelming number of votes. Now, before the RFS has even had time to work, hysteria has some grasping at straws, confusing the American public that removing the RFS is a solution to high fuel and food costs. The real driver of increased costs is $120 barrels of oil and without ethanol, fuel prices would be up to 40 cents a gallon higher at the pump according to numerous recent studies.

"Despite all the proven evidence for the positive impact ethanol is making on our economy and actually holding fuel prices down, presidential campaigning has clouded the common sense of some of our policymakers,” said Bill Chase, president of the SDCGA. “As candidates volley with American sentiment, made vulnerable by economic concern, meaningful solutions are being ignored and misrepresented.”

A study released by the Center for Agriculture and Rural Development at Iowa State University found that, “the growth in ethanol production has caused retail gasoline prices to be $0.29 to $0.40 per gallon lower than would otherwise have been the case.”

Another recent study by Texas A&M University found that, “Relaxing the RFS does not result in significantly lower corn prices.” The Texas A&M report also revealed that “corn prices have had little to do with rising food costs.” This finding is corroborated by recent studies by the U.S. Department of Agriculture’s Economic Research Service, Kansas City Federal Reserve, and other third parties.

Increased production of corn-based biofuels is estimated to account for only 3 percent of the 43 percent increase in global food prices, according to information released by the White House last week. Transportation, packaging, marketing and labor constitute the lion’s share of the food dollar.

“Study after study has proven that energy costs impact consumer prices by a factor of two to one,” said Chase. “A request for an RFS waiver is completely unwarranted, would result in higher gasoline prices and therefore food prices would likely increase. The SDCGA urges candidates to quit politicking with American pocketbooks.”

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