Big Chicken Cries Foul
It turns out that Texas Gov. Rick Perry’s request for a waiver of the Renewable Fuel Standard was prompted by a March meeting he had with big-time East Texas poultry producer Lonnie “Bo” Pilgrim, co-founder of Pilgrim’s Pride Corp., who six days later gave $100,000 to the Republican Governors Association chaired by Perry.
This comes as no particular surprise. The emergence of a vibrant U.S. renewable fuels industry represents a game-changing, epochal shift in the economic order. The established interests threatened by it are, naturally, crying foul.
But lost in the drama over Big Chicken’s squeezed profit margins are the broader economic interests of the American public.
By expanding the U.S. fuel supply, ethanol production is keeping gas prices 50 cents a gallon lower, according to Merrill Lynch. That saves the average household more than $500 per year.
Yes, ethanol production also increases demand for corn, which contributes to higher corn prices. But the impact for the consumer in the grocery aisle is minimal — just $15 a year, the Renewable Fuels Association calculates.
It’s a net win for the American public — even if it’s disruptive for established interests.
Sources:
Houston Chronicle. “$100,000 gift led the attack on ethanol,” by R.G. Ratcliffe, July 1, 2008.
Merrill Lynch. “Biofuels driving global oil supply growth.” Global Energy Weekly, June 6, 2008.
Renewable Fuels Association. “Estimating the Impact of Increased Ethanol Production on U.S. Household Spending.”
