May 23, 2008 - South Dakotans are very familiar with the growth of the renewable fuels industry in our state. Ethanol has created thousands of jobs in South Dakota, provided farmers an additional market for their harvest, and spurred research into cellulosic ethanol - the next generation of renewable fuels. People less familiar with the benefits of biofuels have recently criticized this growing industry because of increasing food prices, but I would like to take the opportunity to set the record straight.
Since 2005, the price of oil has tripled, which has led to the significant spike in gasoline and diesel prices. South Dakota farmers and ranchers are well acquainted with what happens when the price of fuel goes up-the cost of farming does too. From production to packaging to transportation, the cost of petroleum has a greater impact on the cost of food than increased biofuels production ever could.
In this time of soaring gas prices, not to mention our country's 67 percent dependence on foreign oil imports, it would be foolish to undercut biofuels since they are an important part of our national energy strategy. According to a study at Iowa State University, gas prices would be 29 to 40 cents per gallon higher were it not for renewable fuels. In short, ethanol is a reliable fuel that is adding to our domestic supply and reducing our dependence on foreign sources of oil.
Ethanol critics have seized on higher food prices as an opportunity to turn public opinion against renewable fuels, but their claims do not hold up. According to the White House Council of Economic Advisors, food prices have increased 4.5 percent over the past year. Without additional biofuel production, food prices would still have risen 4.25 percent. In other words, ethanol accounts for only one-quarter of one percent of food price increases.
Today, corn and other commodities are at historically high prices, but raw commodity prices contribute relatively little to the retail price of food. Labor, processing, packaging, marketing, and transportation (which of course is heavily reliant on costly oil) make up the bulk of retail food prices. According to the federal Risk Management Agency, the average retail food item travels 1,300 miles from the farm to the local grocery store.
After sifting through the false claims against ethanol production, we have a choice in this country - we can encourage American farmers to grow clean renewable fuel, or we can continue to send hundreds of billions of dollars to foreign countries who may not have our best interests at heart and who seem intent on letting the cost of fuel (and food) continue to rise. Renewable fuels must be a part of our energy strategy, and a dishonest spin campaign is not going to stop us from making the right decisions for America.
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