Corn Dog: We pay for ethanol two ways:

Corn Dog: We pay for ethanol two ways: at the pump and with tax dollars
Sen. John Thune (R-SD) is ticked off.

He issued the following statement after a U.S.-Brazil ethanol pact was signed recently that could result in U.S. funds subsidizing the production of foreign ethanol that would ultimately be destined for the U.S. market. He claims this would be a step backward for U.S. farmers and our biofuels industry.

"Given the growth of the Brazilian ethanol industry and its intentions to penetrate the American market, I believe the administration's plan to promote ethanol production in Brazil is not in the best interests of Americans.


"America's farmers, investors, states in the Midwest, and our federal government have spent years and billions of dollars developing the American ethanol industry," Thune said. "America's dependence on foreign fossil fuels should not be shifted to a new dependence on foreign ethanol."�

Thune added that it is bad public policy for our country to subsidize a foreign industry which could undermine our own efforts to promote energy independence and enhance American agriculture.

Thune makes it sound like Brazil is some sort of haven of ethanol production, and that the United States should strive to be just like the South American country.

Politicians love to bring up Brazil when touting the benefits of ethanol. After all, Brazil's booming ethanol industry has won international acclaim.

We never hear about recent supply and pricing problems in Brazil that suggest that it's not the grand solution to tight oil supplies and ever-rising prices that had been hoped.

Brazilian ethanol producers are struggling to keep up with domestic demand for ethanol, which is projected to grow by 50 percent over the next five years. Yet a 15 percent jump in prices earlier this year sparked a sharp drop in consumption. Even so, suppliers are struggling to plant enough fields of new sugar cane, from which ethanol is produced in Brazil, to keep up with the anticipated growth in demand.

Some energy experts say this has revealed the limits of Brazil's ethanol program and that it is an unreliable energy source, one that can't be depended on to make much of a dent in worldwide use of fossil fuels.

In other words, it may be safe to say that neither Thune nor U.S. producers of ethanol have too much to worry about.

There is another issue that Thune needs to address. Environmentalists and farmers helped convince the Senate to add an ethanol provision to the energy bill that would require refiners to more than double their use of ethanol to 8 billion gallons per year by 2012.

Thune seems to indicate Congress has taken the first step to lead the U.S. down the path to energy independence. With 8 billion gallons?

A closer analysis reveals that domestic ethanol production does nothing to reduce our oil imports. Eight billion gallons may sound like a lot, until you realize that America burned more than 134 billion gallons of gasoline last year. By 2012, those 8 billion gallons might reduce America's overall oil consumption by 0.5 percent. Way back in 1997, the General Accounting Office concluded that "ethanol's potential for substituting for petroleum is so small that it is unlikely to significantly affect overall energy security." That's still true today.

If Brazil is hitting bumps on the ethanol road, Americans, who consume more than 10 times as much oil as Brazilians, face a minefield.

Replacing a year's worth of U.S. gasoline consumption with sugar cane-based ethanol would require a swath of farmland a little smaller than California. Replacing that gasoline with less efficient corn-based ethanol, which the United States produces lots of, would require farmland the size of Texas.

"Biofuels will not make any kind of impact on Americans, the way they're consuming now," said Tad Patzek, geoengineering professor and biofuels expert at the University of California at Berkeley.

Brazil's problems this year started after growers of sugar cane upped sugar production rather than ethanol to take advantage of rising world prices for the sweetener. Most refiners can switch from ethanol to sugar production within hours.

Rising consumption of ethanol had already stretched supplies thin. Prices recently have fallen, but only after the government lowered the required percentage of ethanol mixed with gasoline from 25 to 20 percent, reducing demand. The beginning of the sugar cane harvest also boosted ethanol supplies and lowered prices.

"This showed ethanol can help but it cannot replace fossil fuels, at least right now," said Jed Bailey, Latin American director of Cambridge Energy Research Associates, a U.S. consulting firm. "There's a lot more development that's needed."

The Vermillion Plain Talk editorials reflect the opinion of Plain Talk editor David Lias. You may contact him at david.lias@plaintalk.net

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