Oil prices recently reached a record high of $75 a barrel. And the growing profits are funding such anti-American governments as Iran and Venezuela. These conditions threaten the United States' energy security and have prompted President Bush to say, "America is addicted to oil." To break this addiction, the Bush administration has proposed a 22 percent increase in clean energy research. But proponents of the alternative fuel ethanol say energy independence can be achieved with current technology in 10 to 15 years. VOA's Brian Padden reports from the corn producing state of Iowa.
Farmer Daryl Haack will profit twice from this year's corn crop. First, a local Ethanol production plant will compete with the traditional markets for his corn, increasing demand for his product. Second, he is part owner of the Little Sioux Ethanol plant. So he will also sell the ethanol made from the corn.
"Financially, we projected a 20 to 25 percent return on investment and it's proven to be at least that good. Right now it is considerably better."
The surge in demand for ethanol as an alternative fuel in the United States is benefiting not just Daryl Haack, but also the entire economy here in Iowa. For every dollar spent on foreign oil only 12 cents stays in the local community. But for every dollar spent on Ethanol, 67 cents goes back into Iowa's economy.
"It is what I call value-added because the dividends that are paid by this company go back into the local area and then are spent in the local area to keep the grocery stores and the furniture stores and the auto dealerships operating."
Ethanol is helping make the U.S. more energy independent. And it is a cleaner-burning fuel, providing environmental benefits. But the growing demand for ethanol is simply a matter of economics.
Monty Shaw, with the Iowa Renewable Fuels Association, says that back when oil cost $10 a barrel, ethanol was too expensive to produce. At $45 a barrel ethanol became competitive. And at $70 a barrel, it is now a bargain. "Now what we are seeing is that the refiners are voluntarily putting it in the gasoline from Maine down to Florida, in Houston and Dallas, Texas. You know basically every gallon of gasoline in California has ethanol in it, not because they are required to use it. They are not. It's there because it's the most cost-effective source of octane they can find.
Currently, refineries are a using only a 10 percent ethanol blend in gasoline. And there is not enough corn to replace the over 530 billion liters of gasoline consumed each year in America. But Monty Shaw says the U.S. could act both to increase ethanol production, and to lower consumption with flex fuel vehicles, which use an 85 percent blend of ethanol, and hybrid cars, which are powered by both electricity and fuel.
"We have the technology today to produce enough ethanol to fuel 85 percent of hybrid electric flexible fuel vehicles that would completely eliminate our imports of foreign oil for transportation. Can we do that overnight? No, we need to change our entire vehicle fleet. But if the United States today stood up and said we are not going to buy another car that is not a flexible fuel hybrid, in 10 years to 15 years we would be over our foreign oil addiction. Not just reduced -- but eliminated."
With a little foresight, investment and political will he says, higher energy prices today could end up being good for America tomorrow.