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Biofuels not the answer, not the problem either

There is so much hysteria, misinformation and outright fabrication of evidence against biofuels that it is almost impossible to know where to start a rebuttal. So why not start with the facts.

Biofuels were never supposed to be the answer to our nation's energy problems. Biofuels were supposed to be a component of our energy strategy, and a way to reduce our dependence on foreign oil. In many ways, biofuels are cleaner and friendlier to our environment.

Biofuels were originally part of a strategy to add value to the crops that our farmers produce. That strategy has worked well.

But anyone blaming biofuels for our economic and energy problems should consider a few facts.

Sixty years ago in 1948, corn was around $1.25 per bushel and oil was around $2.50 per barrel. In the past sixty years, corn has gone up in value four-fold, to around $5 per bushel, while oil has gone up 40-fold, to around $100 per barrel. Today it is $125!

According to Robert Zubrin in his book, Energy Victory, with OPEC-rigged oil prices exceeding $100 a barrel, the United States will pay $800 billion for its oil supply, and the world will pay $3.2 trillion. “These figures up a factor of 10 from 1999 and represent a huge regressive tax on the world economy,” Zubrin said.

Agricultural commodity prices, however, rise and fall regularly due to supply and demand economics.

U.S. agricultural producers have an incredible ability to overproduce when given the incentive.

Technology also plays a huge role in commodity values. In 1947, the average corn yield was 28.6 bushels per acre. In 2007 it had risen to 151.1 bushels per acre. It is expected to climb at an even greater rate with the advent of biotech crops and new technology that improves nutrient utilization.

So before we start considering abandoning what could easily be 10 percent of our gasoline requirements over the next two years, maybe we should step back and take a look at the broader picture.

We produce about 13 billion bushels of corn each year for livestock feeding, ethanol production and exports to other countries. A $2 per bushel rise in the cost of corn results in a $26 billion impact to our economy. That $26 billion stays in America and bolsters our rural communities with very little negative consequence to food prices.

We also consume 140 billion gallons of gas and 65 billion gallons of diesel fuel each year. A $2 per gallon increase in the cost of gas results in a $400 billion impact to our economy. A large percentage of that $400 billion is going to the Middle East and not being reinvested in the United States. No wonder the value of the dollar is falling.

Developing economies like China and India are having a dramatic impact on food and fuel prices.

Although their labor costs are low, their standard of living is rising quickly and their demand for fuel and higher quality food is also increasing.

Thus, whatever money we have left over from the Middle East, we are sending to China so that they can drive better cars and have better diets.

Biofuels have never been touted as the answer to all of our problems. You have to admit, the growth of the industry has been nothing short of phenomenal. Unfortunately, biofuels are no “silver bullet.” We must reduce consumption, increase domestic production and increase nuclear, wind and solar energy.

We must produce more flexible fuel vehicles and continue to build our infrastructure. We must develop a cohesive energy policy and stick with it because of the volatility of commodity prices. We absolutely have to take control of an economic future that relies heavily on energy costs. It costs more than $60 to fill up an 18-gallon gas tank, but Wendy's still has a 99-cent value menu. Let's not lose sight of the real problem!

Pete Moss is the president of Frazier, Barnes & Associates, a technical and market consulting firm based in Memphis, Tenn. He has been involved in the biodiesel industry since its inception and is a frequent speaker and moderator at biofuel conferences.

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