07/09/08 Reducing Fuel Standards

Reducing Fuel Standards. I'm Greg Martin with today's Line On Agriculture. What to do about renewable fuels? It depends on who you are talking to as to whether they are good or bad. In fact it is almost a Catch 22 in some cases. We need ethanol to offset the price of petroleum fuels but what is it doing to crop costs? More than 50 house Republicans joined forces to ask the environmental protection agency to reduce the renewable fuels standard, which requires the nation to use a certain amount of ethanol. American Farm Bureau Energy Specialist Anne Steckel says that would be a big mistake. STECKEL: If we're ever going to lessen our dependence on foreign oil, if we're ever going to get to the next generation of ethanol, past corn, we need to keep moving forward and not move backwards. The lawmakers are blaming ethanol for higher food prices. Steckel says that's another mistake. STECKEL: We need to look at the overall reasons why food prices have increased and there are a number of them. Oil prices have increased over 100 percent in the last year. Also there have been worldwide weather concerns. We've had record demand in developing countries, the weak dollar and other factors. Many people don't know that ethanol has been a part of the U.S. fuel supply for quite a number of years resulting in a lower at the pump price and Steckel points out that ethanol deserves some credit for saving consumers money. STECKEL: The use of renewable fuels actually lessens our dependence on foreign oil and also lowers our overall gasoline prices by 15 percent. Corn based ethanol is not the only game in town. Many other areas are being looked into as an alternative to corn and Steckel says now is not the time to start hedging, that it's important to stay the course. STECKEL: We really need to stay with the renewable fuels standard that we have in place and not backtrack. There will always be a place for corn ethanol in our renewable fuels system; however we would like to diversify. There are a lot of different technology angles out there, such as algae, switchgrass and things like that. But we will not have the investment from outside investors if there is not that mandate that demand for the marketplace in the future. Bottom line is that the finger should be pointing at oil. STECKEL: Everyone needs to take a deep breath and look at the broader picture and the reasons why food prices have been going up, the reasons why gasoline prices have been going up and the number one reason is oil. Oil has increased 100 percent in the last year and that goes into things that we're using. That's today's Line On Agriculture. I'm Greg Martin on the Northwest Ag Information Network.