Good Answers
The May 15 edition of Fuel for Thought (”Good Questions”) took note of a letter from Senator Jeff Bingaman (D-N.M.) to the secretaries of Energy and Agriculture, in which Bingaman asked a good set of questions about the link between renewable fuel mandates and domestic and international food prices.
Yesterday, the secretaries delivered a good set of answers.
The big picture?
“It is clear,” the secretaries write, “that biofue1s are already moderating gasoline prices. That impact is likely to grow substantially as more biofuels come to market. Our preliminary analysis further suggests that current biofuels-related feedstock demand plays only a small role in global food supply and pricing. Moreover, the impact of biofuels on U.S. consumers is even smaller since the farm price of commodities accounts for less than twenty percent of U.S. consumers’ food costs.”
The secretaries’ letter goes on to address, in specific detail, how increased ethanol and biodiesel consumption are affecting domestic agriculture and food prices; international agriculture and food prices; and domestic gasoline and diesel prices. They also estimate the potential effects of removing biofuels from the market versus expanding consumption to meet the targets laid out in the EISA.
Together, the answers underscore a point on which the secretaries and Sen.
Bingaman agree: “it’s wise for folks to catch their breath and get better educated on the complexities before charging ahead with changes” to America’s recently enacted biofuel policies.
Sources:
Letter to Senator Jeff Bingaman from Energy Secretary Samuel Bodman and Agriculture Secretary Ed Schafer, June 11, 2008.
