"A summer full of unfavorable studies and criticism may be enough for ACE to invest in Beltway public relations damage control, but the facts about ethanol's drawbacks cannot be disputed, and policymakers should be aware of the significant consequences American consumers and the environment could face should they increase the federal mandate and subsidies for biofuels."
WASHINGTON--(BUSINESS WIRE)--NPRA, the National Petrochemical and Refiners Association, Executive Vice President Charles T. Drevna today dismissed baseless claims made by the American Coalition for Ethanol (ACE) that oil companies are "discouraging ethanol use by not passing along the cost-benefits to consumers."
"ACE's statement is absolutely ludicrous given the facts," Drevna said. "According to a number of studies, there are very few cost benefits to be 'passed down.' A FarmEcon.com study said only last week that '(i)n total, the costs of ethanol paid by taxpayers, fuel purchasers and the food system is about $31 billion in 2007, or about $4.40 per gallon of ethanol produced. Corrected for the energy content of ethanol relative to gasoline, this is equivalent to a wholesale gasoline price of $6.67 per gallon. Ethanol is not a cheap source of energy, it is about 3 times as expensive as gasoline.' The study also stated that '(t)he ethanol subsidy program is now increasing the cost of food production though side effects on major crop prices and plantings. The cost increases are already starting to show up in the prices of meat, poultry, dairy, bread, cereals and many other products made from grains and soybeans.'(1)
"A summer full of unfavorable studies and criticism from economists and environmentalists alike may be enough for ACE to invest in Beltway public relations damage control, but the facts about ethanol's drawbacks cannot be disputed, and policymakers should be aware of the significant consequences American consumers and the environment could face should they increase the federal mandate and subsidies for biofuels."
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And here's another critical study.
We have just issued a major report that documents the various ways in which biofuels are supported by governments across OECD countries -- which we estimate at around $11 billion a year or more and rising fast. The USA comes out on top in the measurement of total support (around $6 billion a year in 2006), but the EU is close behind, at $4.2 billion. Canada is also poised to become a significant producer, but at least most of its subsidies (starting next year) will be variable -- i.e., take into account the price of crude oil.
You can download a copy of the report, "Biofuels — At What Cost? Government support for ethanol and biodiesel in selected OECD countries", here:
www.globalsubsidies.org/article.php3?id_article=35&var_mode=calcul
We shall be releasing a separate report on the EU's biofuel support policies on this coming Wednesday.
Cheers,
Ronald Steenblik
Director of Research,
Global Subsidies Initiative (GSI)
of the International Institute for Sustainable Development
Geneva and Winnipeg
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