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RENEWABLE FUELS ASSN: THE TRUTH ABOUT ETHANOL, ENERGY SECURITY AND WORLD GRAIN SUPPLIES
Geoff Cooper
By Geoff Cooper, President and CEO, Renewable Fuels Assn

In nearly 20 years of advocating for American renewable fuel producers and farmers, I've seen my share of baseless accusations, uninformed rhetoric, and outright misinformation about corn ethanol.

But in those two decades, I have rarely seen an attack as ignorant, incoherent, and insulting as the bizarre tirade recently launched against ethanol by David Frum in The Atlantic ("Ethanol: The Fuel that Powers Putin").

One of the first rules of effective debate is to never repeat the deceiving arguments of your opponent, so I won't go into detail on Mr. Frum's specious allegations about the impacts of ethanol on global grain markets and food security. But the crux of his cockamamie contention is that expanded U.S. ethanol production has somehow "strengthened Russia's grip upon the world's food supply" because American farmers today are producing more corn for domestic use and less wheat for export than they did in the 1980s. This is completely absurd.

Wheat's decline in the United States began decades before commercial-scale ethanol production even began. The amount of U.S. cropland planted to wheat peaked in 1981 at 88 million acres, ironically, in response to President Reagan's lifting of a U.S. grain embargo against Russia (the embargo, incidentally, had been put in place by President Carter following the Soviet Union's invasion of Afghanistan). Ethanol was barely an idea at that time.

After hitting the high-water mark in the early 1980s, wheat markets stagnated over the next two decades. Global surpluses overwhelmed demand as farmers became more productive; mid-1990s U.S. farm policy encouraged farmers to diversify their mix of crops; global trade agreements leveled the playing field for the world's wheat producers; and technological innovation in other crops far outpaced improvements in wheat.

At the same time, farmers in post-soviet Russia and Eastern Europe were finding that they had a comparative advantage in wheat production. They had ideal climatic conditions, could produce it cheaper than the U.S. farmer, and were far closer to import-reliant wheat markets like Egypt, Turkey and China.

By 2001, wheat acres planted in the United States had fallen to just 59 million acres-33 percent below the peak from just two decades earlier. This had nothing to do with ethanol. Indeed, the fledgling ethanol industry in 2001 was less than 1/10th of its current size and used just 5 percent of the U.S. corn supply.

To suggest that the emergence of the ethanol industry is somehow responsible for reduced U.S. wheat production since the 1980s isn't just wrong-it's irresponsible. If anything, ethanol's growth in the 2000s was embraced by farmers-who had watched global economic forces erode prices and demand for U.S. wheat-because it gave them hope that they could profitability raise other crops on land previously dedicated to wheat.

In any case, the U.S. remains as the world's third-leading producer and exporter of wheat. Due to increased yield per acre, the average annual U.S. wheat crop has been larger over the past 10 years than it was during the decade of the 1970s, even though acreage has fallen by nearly one-quarter since then.

It was Frum's former boss, President George W. Bush, who correctly recognized the massive potential of ethanol to reduce our nation's dependence on foreign oil, while simultaneously cleaning the air and supporting farm income. While Frum chides Presidents Carter and Obama for their support of biofuels, it was President Bush who personally championed the creation of the Renewable Fuel Standard (RFS) in 2005 and successfully worked with Congress to expand the RFS as part of the 2007 Energy Independence and Security Act. Partly as a result of that landmark policy, ethanol displaces the need for 550 million barrels of imported crude oil every year, keeping billions of dollars in the U.S. economy.

Frum claims that ethanol and the RFS are no longer necessary because the United States "has become the world's largest producer of both oil and natural gas." But what has that gotten us? One need not look any further than today's record-high gas prices and $100 oil to understand that increased U.S. oil production has done little to insulate American families from the volatility and geopolitical vagaries of world petroleum markets.

How much higher would gas prices be without the roughly 15 billion gallons of ethanol blended annually? One estimate, from a former Yale University economist and advisor to two presidents, suggests Americans would be paying an extra 22 cents per gallon-or about $250 per household per year-if the RFS was eliminated, as called for by Frum. What's more, there is no "ethanol subsidy," as claimed by Frum-the tax credit available to oil companies that blended ethanol expired in 2011. Meanwhile, the oil industry continues to enjoy subsidies and tax write-offs, some of which have been in the U.S. code for more than a century.

Further, if global support for Ukraine is truly unconsolidated, as Frum implies, it's not because of U.S. agricultural policy or America's ethanol industry. It's because those countries who have been slow to condemn Russia's actions are dependent on Putin's oil and gas and they fear the consequences of aligning with his enemies. Indeed, oil-not wheat (as Frum suggests)-is the real "Russian weapon of intimidation."

That's why domestically produced renewable fuels are so important. The United States was able to swiftly ban Russian crude oil imports partly because our nation's leaders know America's farmers and renewable fuel producers are at the ready to step into the breach and increase the production and use of low-carbon, lower-cost ethanol.

If unrest in Ukraine has taught us anything about the highest and best use of our agricultural and energy resources, it's that we should double down on-not walk away from-policies that support expanded use of domestically produced low-carbon fuels. As an Army veteran who has dedicated my career to helping our nation enhance its energy and economic security, I was utterly offended by the odious suggestion that America's farmers and ethanol producers are somehow "powering Putin." I expect better from The Atlantic and political commentators like David Frum.


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