News / USA

    Cutting Ethanol Subsidy Might Not Impact Food Prices

    2007 US law requires use of renewable fuels

    With the U.S. ethanol industry consuming about a quarter of the nation’s maize crop, many have blamed biofuels for rising food prices in recent years. The new year brought the end to a $6-billion subsidy supporting the industry, but that doesn't mean food prices will drop because of it.

    Hereford Renewable Energy in the Texas Panhandle region is one of 200 plants across the country producing ethanol fuel from maize, which is called corn in the United States.  Reagan Howell runs the plant. Before this job, he ran an oil refinery.

    “Honestly, I had not followed the price of corn until I got into the ethanol industry,” Howell says.

    But with corn-based ethanol making up 10 percent of most gasoline in the United States, it is one of several factors pushing up the cost of food, according to Purdue University economist Wally Tyner.

    “Ethanol is a driver of corn prices and has helped to pull up corn prices and all the other agricultural commodities because they are all linked,” he says.

    In the United States, higher commodity prices have helped raise the cost of meat and dairy because livestock feed costs more. But the impacts have been felt most strongly in developing countries that depend on imported food.

    Corn-based ethanol makes up 10 percent of most gasoline in the United States, which helps push up the cost of food.
    Corn-based ethanol makes up 10 percent of most gasoline in the United States, which helps push up the cost of food.

    Last year, with Congress under a mountain of debt and looking for budget cuts, a $6-billion subsidy supporting the ethanol industry looked like a prime target.

    “It is expiring. And I give the ethanol industry great credit for allowing it to expire,” says Bob Dinneen, head of the Renewable Fuels Association, an ethanol industry trade group, who says he didn't fight to extend the subsidy because the industry has matured. “We never wanted to be tied to the taxpayer forever, and I think it is great that we are at a point where it has done its job. We are moving on.”

    But experts say the main reason the industry has reached this point is not the subsidy, but rather a 2007 law aimed at increasing domestic production of renewable fuels including ethanol.

    The law requires gasoline makers to blend renewable fuel into their products. Texas plant manager Reagan Howell notes ethanol is basically the only option.

    “We are legally obligated to make ethanol," says Reagan Howell of Hereford Renewable Energy. "It is the only renewable fuel that is commercially viable right now.”

    Gasoline makers will be legally obligated to use 50-billion liters of ethanol this year. That will use up more than a quarter of the U.S. corn supply, says Purdue’s Wally Tyner.

    “We are not going to see a big change in food prices due to the elimination of the subsidy, because the driver of the policy today is the renewable fuel standard. That stays.”

    Some advocates want to relax the renewable fuel standard until corn supplies are larger and less vulnerable to ethanol’s impact.  But with oil prices high, gasoline makers will likely continue to find it profitable to add ethanol.

    Though there is more to high food prices than ethanol, the competition between fuel and food is likely to continue.   


    Steve Baragona

    Steve Baragona is an award-winning multimedia journalist covering science, environment and health.

    He spent eight years in molecular biology and infectious disease research before deciding that writing about science was more fun than doing it. He graduated from the University of North Carolina at Chapel Hill with a master’s degree in journalism in 2002.

    You May Like

    US, Somalia Launch New Chapter in Relations

    US sends first ambassador to Somalia in 25 years; diplomatic presence and forces pulled out in 1993, after 18 US soldiers were killed when militiamen shot down military helicopter

    Brexit Vote Ripples Across South Asia

    Experts say exit is likely to have far-reaching economic, political and social implications for a region with deep historic ties to Britain

    Russian Military Tests Readiness With Snap Inspections

    Some observers see surprise drill as tit-for-tat response to NATO’s recent multinational military exercises in Baltic region

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Testing Bamboo as Building Materiali
    X
    June 27, 2016 9:06 PM
    For thousands of years various species of bamboo - one of the world's most versatile plants - have been used for diverse purposes ranging from food and medicine to textiles and construction. But its use on a large scale is hampered because it's not manufactured to specific standards but grown in the ground. A University of Pittsburgh professor is on track to changing that. VOA’s George Putic reports.
    Video

    Video Testing Bamboo as Building Material

    For thousands of years various species of bamboo - one of the world's most versatile plants - have been used for diverse purposes ranging from food and medicine to textiles and construction. But its use on a large scale is hampered because it's not manufactured to specific standards but grown in the ground. A University of Pittsburgh professor is on track to changing that. VOA’s George Putic reports.
    Video

    Video Orphanage in Iraqi City Houses Kids Who Lost their Parents to Attacks by IS

    An orphanage in Iraqi Kurdistan has become home to scores of Yazidi children who lost their parents after Islamic State militants took over Sinjar in Iraq’s Nineveh Province in 2014. Iraqi Kurdish forces backed by the U.S. airstrikes have since recaptured Sinjar but the need for the care provided by the orphanage continues. VOA’s Kawa Omar filed this report narrated by Rob Raffaele.
    Video

    Video Re-Opening Old Wounds in a Bullet-Riddled Cultural Landmark

    A cultural landmark before Lebanon’s civil war transformed it into a nest of snipers, Beirut’s ‘Yellow House’ is once again set to play a crucial role in the city.  Built in a neo-Ottoman style in the 1920s, in September it is set to be re-opened as a ‘memory museum’ - its bullet-riddled walls and bunkered positions overlooking the city’s notorious ‘Green Line’ maintained for posterity. John Owens reports from Beirut.
    Video

    Video Brexit Resounds in US Presidential Contest

    Britain’s decision to leave the European Union is resounding in America’s presidential race. As VOA’s Michael Bowman reports, Republican presumptive nominee Donald Trump sees Britain’s move as an affirmation of his campaign’s core messages, while Democrat Hillary Clinton sees the episode as further evidence that Trump is unfit to be president.
    Video

    Video New York Pride March A Celebration of Life, Mourning of Loss

    At this year’s march in New York marking the end of pride week, a record-breaking crowd of LGBT activists and allies marched down Manhattan's Fifth Avenue, in what will be long remembered as a powerful display of solidarity and remembrance for the 49 victims killed two weeks ago in an Orlando gay nightclub.
    Video

    Video NASA Juno Spacecraft, Nearing Jupiter, to Shed Light on Gas Giant

    After a five-year journey, the spacecraft Juno is nearing its destination, the giant planet Jupiter, where it will enter orbit and start sending data back July 4th. As Mike O'Sullivan reports from Pasadena, California, the craft will pierce the veil of Jupiter's dense cloud cover to reveal its mysteries.
    Video

    Video Orlando Shooting Changes Debate on Gun Control

    It’s been nearly two weeks since the largest mass shooting ever in the United States. Despite public calls for tighter gun control laws, Congress is at an impasse. Democratic lawmakers resorted to a 1960s civil rights tactic to portray their frustration. VOA’s Carolyn Presutti explains how the Orlando, Florida shooting is changing the debate.
    Video

    Video Tunisian Fishing Town Searches for Jobs, Local Development Solutions

    As the European Union tries to come to grips with its migrant crisis, some newcomers are leaving voluntarily. But those returning to their home countries face an uncertain future.  Five years after Tunisia's revolution, the tiny North African country is struggling with unrest, soaring unemployment and plummeting growth. From the southern Tunisian fishing town of Zarzis, Lisa Bryant takes a look for VOA at a search for local solutions.
    Video

    Video 'American Troops' in Russia Despite Tensions

    Historic battle re-enactment is a niche hobby with a fair number of adherents in Russia where past military victories are played-up by the Kremlin as a show of national strength. But, one group of World War II re-enactors in Moscow has the rare distinction of choosing to play western ally troops. VOA's Daniel Schearf explains.
    Video

    Video Muslim American Mayor Calls for Tolerance

    Syrian-born Mohamed Khairullah describes himself as "an American mayor who happens to be Muslim." As the three-term mayor of Prospect Park, New Jersey, he believes his town of 6,000 is an example of how ethnicity and religious beliefs should not determine a community's leadership. Ramon Taylor has this report from Prospect Park.
    Video

    Video Internal Rifts Over Syria Policy Could Be Headache for Next US President

    With the Obama administration showing little outward enthusiasm for adopting a more robust Syria policy, there is a strong likelihood that the internal discontent expressed by State Department employees will roll over to the next administration. VOA State Department correspondent Pam Dockins reports.
    Video

    Video Senegal to Park Colorful ‘Cars Rapides’ Permanently

    Brightly painted cars rapide are a hallmark of Dakar, offering residents a cheap way to get around the capital city since 1976. But the privately owned minibuses are scheduled to be parked for good in late 2018, as Ricci Shryock reports for VOA.

    Special Report

    Adrift The Invisible African Diaspora