New CBO Report Shows Ethanol Has Little Impact on Food Prices

Washington – Growth Energy’s CEO, Tom Buis, released the following statement today regarding the new report from the Congressional Budget Office on the impact of ethanol on food prices:

“The report released by the Congressional Budget Office (CBO) confirms what we’ve known for some time – the impact of ethanol production on food prices is minimal and that energy was the main driver in the rise of food prices. But now that corn and energy prices have fallen dramatically, we hope CBO will look at why grocery prices have not dropped accordingly. Growth Energy has called on Congress to investigate food prices so we can get to the bottom of this issue.

“We hope the CBO continues it work so that we can better understand the true impact that energy prices and speculation played in raising commodity and food prices. There is still not enough understanding of why corn prices have wildly fluctuated over the past 12 months even as ethanol production has steadily increased. After examining approximately 25 food price studies and conducting their own analysis, a team of economists at Purdue estimated that energy prices accounted for 75 percent of the increase in corn prices. Excessive speculation in the commodities market also played a significant role, helping to drive up the costs of almost every commodity traded, including corn, coffee, and crude oil.

“We also encourage the CBO to use the most-up-to-date data when it comes to the positive impact that ethanol has on the environment. While the CBO report confirms that ethanol reduces greenhouse gas emissions, the report relies on outdated information and underestimates the potential of ethanol. The most recent study published in Yale’s Journal of Industrial Ecology shows ethanol produced in the U.S. reduces greenhouse gas emissions by up to 59 percent compared to gasoline. The peer-reviewed article can be found here:

“As the only existing alternative to foreign oil, ethanol production has saved the government billions of dollars by avoiding farm subsidy payments and saved American consumers billions of dollars at the gas pump by reducing gas prices by up to 40 cents per gallon. Blending higher percentages of ethanol into our gas is a step we can take right now to create American jobs, increase our energy independence, and improve our environment. Increasing the blend to 15 percent is supported by sound science, will create more than 136,000 green-collar jobs, inject $24.4 billion into the U.S. economy, displace seven billion gallons of imported gasoline per year and reduce greenhouse gas emissions by 20 million tons per year – the equivalent of removing 3.5 million vehicles from our roads.”


About Growth Energy
Growth Energy is a group committed to the promise of agriculture and growing America’s economy through cleaner, greener energy. Growth Energy members recognize America needs a new ethanol approach. Through smart policy reform and a proactive grassroots campaign, Growth Energy promotes reducing greenhouse gas emissions, expanding the use of ethanol in gasoline, decreasing our dependence on foreign oil, and creating American jobs at home. More information can be found at