Obama and Senate Ag Committee agree on investing more in biofuels

By Jon H. Harsch

© Copyright Agri-Pulse Communications, Inc.

WASHINGTON, March 30 - Coinciding with President Obama's energy speech Wednesday calling for increased investment in biofuels and other clean energy sources, biofuels experts told a Senate Agriculture Committee hearing that petroleum's “monopoly power” is blocking the road to biofuels. POET ethanol CEO Jeff Broin said that despite petroleum's dominance, ethanol has become a major fuel which is keeping both fuel prices and food prices lower than they would be without competition from ethanol.

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Senate Agriculture Committee Chair Debbie Stabenow, D-Mich., and Ranking Member Pat Roberts, R-Kan., at Wednesday's hearing on gasoline prices. Photo: Agri-Pulse.

In his energy policy speech, Obama warned that with near $4 gas hurting everybody, “we will keep on being a victim to shifts in the oil market until we get serious about a long-term policy for secure, affordable energy.” He said the answer is investing in “finding and producing more oil at home, and reducing our dependence on oil with cleaner alternative fuels and greater efficiency . . . not just ethanol, but biofuels made from things like switchgrass, wood chips, and biomass.”

Following the Senate Agriculture Committee hearing on “Evaluating High Gas Prices,” Committee Chair Debbie Stabenow, D-Mich., told Agri-Pulse that “on the biofuels front, we have put in place policies and funding for an industry that is maturing.” She said the next step should be “to focus on what we can do with cellulosic, so we are not only focusing on corn but also other options for feedstock.”

Stabenow said Wednesday's hearing testimony highlighted “the importance of advanced biofuels to create energy independence and bring down costs.” Rejecting Republican efforts to reduce or eliminate support for ethanol, she said she supports the ethanol industry's own proposal to phase down the current blender tax credit “to move toward investments in blender pumps and infrastructure and making sure we have flex-fuel vehicles on the road, so that as we are creating these new fuels, you can actually find them at the pump.”

During the hearing, POET CEO Jeff Broin said some recent studies “concluded that ethanol keeps U.S. retail gasoline prices about 17 cents per gallon lower. That translates into an annual savings of $100 per driver and approximately $24 billion in annual savings for U.S. drivers as a whole. Other studies have found the savings as high as 50 cents per gallon.” He said this economic benefit is limited by an artificial ceiling on the amount of ethanol which can be blended with gasoline. He said one costly result is that “economically competitive American ethanol is being shipped to Abu Dhabi while $100 per barrel oil is coming to America from Abu Dhabi. Meanwhile we've got more than $1 billion of American assets sitting idle, ethanol assets that could be providing American jobs.”

Broin forecasts significant gains in terms of lower fuel prices and more U.S. jobs if U.S. energy policy shifts to providing blender pumps, ethanol pipelines, and flex-fuel vehicle requirements so that “the oil industry and their suppliers would no longer enjoy exclusive access to 90% of American fuel tanks.” He concluded that “the best way to lower prices for consumers is to allow competition in the marketplace.”

To read written testimony from the Senate Agriculture Committee's March 30 hearing on “Fundamentals and Farming: Evaluating High Gas Prices and How New Rules and Innovative Farming Can Help,” click HERE.

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