Food and Fuel America.com: Using More Ethanol Doesn't Hurt Food Prices

Wednesday, August 22, 2007

Using More Ethanol Doesn't Hurt Food Prices

Recently the Detroit News ran an editorial discussing the important role for Michigan in alternative energy like ethanol. Unfortunately, it also failed to correct the myths concerning ethanol and food price increases.

In response, the Clean Fuels Development Coalition sent this Letter to the Editor:

While The Detroit News should be applauded for its forward-looking editorial on the virtues of homegrown, renewable fuels ("Michigan must lead on alternative fuels," Aug. 5), it also missed an opportunity to correct a wildly exaggerated myth that ethanol has caused some food prices to double or triple.

We couldn't agree more with the editorial's theme that ethanol has provided tremendous benefits. From a significant reduction in greenhouse gases to the decreased reliance on foreign oil; from the estimated creation of 147,000 jobs to the economic income from additional tax revenues; it is without debate that ethanol has ushered in a new era of fuel economy and efficiency for all Americans.

However, contrary to the misinformation, the pursuit of expanded ethanol production does not greatly impact retail food prices. This latest myth is likely promulgated by special interest groups with specific agendas.

In fact, a recent study done by independent economist John Urbanchuk found that oil and gasoline prices have twice the impact on consumer food prices that corn prices have. Furthermore, the U.S. Department of Agriculture projects overall food prices will increase 1.9 percent in 2007 and 2.8 percent in 2008.

This compares with food price increases of 2.4 percent in both 2005 and 2006, and an average of 2.9 percent in the past 25 years. It is also interesting to note that corn prices have been down more than $1 since the beginning of this year.

The News is right on when it said America must lead on alternative fuels. We can accomplish this through sensible policies that will both feed and fuel our country.

Douglas A. Durante
Director
Clean Fuels Development Coalition
Washington, D.C.