Ag and Energy Chiefs Say Ethanol is Moderating Gas Prices

Cindy Zimmerman

The U.S. Secretaries of Agriculture and Energy sent a letter to Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM) answering questions about biofuels production and food prices.

Sam BodmanIn the joint letter, Energy Secretary Samuel Bodman and Agriculture Secretary Ed Schafer noted the complexity of the food and fuel pricing issues and cautioned the senator “against hasty judgments driven by highly questionable, agenda-driven calculations, some of which have been featured prominently in the popular press.”

“It is clear, however, that biofuels are already moderating gasoline prices,” they state in the letter. “That impact is likely to grow substantially as more biofuels come to market.”

Ed SchaferThe secretaries answered six specific questions related to the production of ethanol and biodiesel and the price of both food and fuel. Regarding food, they responded that biofuels accounted for approximately 3-4 percent of the overall rise in retail food prices domestically and as much as five percent globally. They note the many other factors contributing to higher commodity prices, including increased demand for food; lowered production and reduced stocks due to weather; export restrictions and – record prices for gasoline and diesel fuel that have increased “the costs of producing, transporting, and processing food products.”

As for fuel prices, the secretaries said, “We estimate that, if we had not been blending ethanol into gasoline, gasoline prices would be between 20 cents per gallon to 35 cents per gallon higher.”

Biodiesel, Ethanol, Government, News