WASHINGTON – Pointing out that gas prices are up nearly 80 cents over the last year because of Middle East instability and growing demand for oil from China, Growth Energy Chairman Jeff Broin told the Senate Agriculture Committee today that American ethanol can reduce fuel prices for consumers both today and over the long term.
In his testimony, Broin, CEO of POET, the world’s largest producer of renewable fuel, explained that ethanol is already reducing prices at the pump and can cut fuel prices even more if alternative fuels had greater access to the market.
“What ethanol is doing today to lower gas prices is nothing compared to what it will do in the future if given the chance,” Broin said. “The most important thing we can do is to follow through on the promise of the Renewable Fuel Standard. Although that law calls for 36 billion gallons of renewable fuels, the industry is being prevented from reaching that goal by a 30-year-old administrative rule limiting ethanol blending to 10 percent of the fuel supply. The ethanol industry has a roadmap for how we can help reach this goal to help consumers pay less at the pump, improve our energy security and improve our environment.”
Broin noted that the “blend wall,” the artificial limit on the amount of ethanol that can be used in our fuel supply, has many consequences for America. First, because ethanol is limited to 10 percent, we are exporting lower-priced ethanol while importing more expensive foreign oil. Second, with the blend wall intact, the ethanol industry cannot provide any more relief to consumers suffering from climbing gasoline prices.
Studies show that at current levels, ethanol reduces the price that consumers pay at the pump. A 2010 study conducted by the Windmill Group analyzed publicly available data to conclude that ethanol use saves consumers 30 cents per gallon – a total of $41 billion for consumers in 2009, or $180 for every individual motorist. By eliminating the blend wall, the full benefits from ethanol can be realized.
Growth Energy’s position is that ethanol is of enormous benefit to the American economy:
• If you were to remove all gasoline derived from foreign petroleum, and measure only the gasoline and ethanol produced from domestic sources, ethanol currently supplies 34 percent of America’s fuel supply.
• American-made ethanol displaced 445 million barrels of imported oil in 2010.
• In 2010, ethanol contributed $92 billion to the country’s Gross Domestic Product in the form of direct and secondary economic impact. The industry supports more than 678,000 jobs.
• In just 10 years, production of ethanol in the United States has grown by more than 715 percent. The industry is rapidly advancing in part due to innovation, and in part due to demand, because ethanol is the cheapest motor fuel on the planet.
America’s ethanol industry has been an undeniable success reducing our nation’s reliance on foreign oil and lowering fuel prices. The way to continue this success is to allow market access. Increasing the number of flex fuel pumps at gas stations and flex fuel vehicles on the road will give consumers an opportunity to choose their fuel – instead of having that choice made for them.
Broin testified that the surest way to lower the price of gasoline is to allow another product the opportunity to compete with it. Over time, Growth Energy and other groups are willing to exchange the current tax credit for funds that build the infrastructure necessary for consumers to have fuel choice.
“It is entirely within our power to create a level playing field where ethanol can offer consumer choice and true competition for the majority of the American fuel tank. When consumers have choices, their pocketbooks are the true winners,” Broin said.