Victims of Our Own Success?
By Pete Moss
Frazier, Barnes & Associates
I guess I don’t see things the same way as other people. Every time I drive by a gas station and see someone filling their car I wonder where those dollars are going. Are they going to feed the hungry? No. Are they going to help clean up the air? No. Are they going to be spread across the country to diversify our economy and renew rural areas? No. Are they making America more safe and secure? Absolutely not! Those hard earned dollars are lining the pockets of largely foreign oil companies and building ski resorts in a desert far, far away. They’re funding extremists who plot to harm us and turning power hungry dictators into loudmouthed tyrants (does Venezuela ring a bell?).
It’s understandable that the media is jumping on the anti-renewable fuel bandwagon. Over the past few months we have been told that renewable fuels cause gas prices to rise, increase the cost of everything from milk to tortillas and, according to a recent U.N. release, cause "100 million people around the world die daily from hunger-related causes.” That works out to 36.5 billion people each year that die as a result of the renewable fuel industry. It is outrageous that these unsubstantiated statements are even reported, but where is the outrage over $90 per barrel oil?
It’s true that corn prices have risen approximately $1.00 per bushel over the ten year average. The almost fully harvested 13 billion bushel corn crop translates into a $13 billion positive impact on our economy (that money stays at home!). Guess what the impact a $1.75 per gallon increase in gas costs us? Since we consume 140 billion gallons per year (of gas), that equates to a $245 billion impact on our economy (and those dollars do not stay at home!!!). Add in diesel fuel consumption at 65 billion gallons and you get another $114 billion. Is it any wonder that the U.S. dollar is at record lows? By the way, that higher priced corn is offset by reduced subsidies paid to U.S. farmers. That means lower federal spending. What is the offset for the higher priced oil and gas?
Don’t be fooled by red herrings. U.S. farmers grew 3 billion more bushels of corn last year and biotech companies project substantial increases in per acre yields over the next few years. Never underestimate the ability of the U.S. farmer to produce what the market demands, even if it ultimately reduces his own profits.
I suppose I am different. I do not think it is wise to wait for $150 - $200 crude oil and an economic meltdown before we get serious about renewable fuel production. Burying our heads in the Middle Eastern sand will not make the real problem go away. Getting ethanol production up to 7.5 billion gallons has not been easy, nor has it been risk free to those who invested in this industry. The same is true for biodiesel and second generation biofuels. So the next time you are gassing up at the local fueling station watching the dollars spin around, ask yourself one simple question, who on earth would benefit from negative publicity on renewable fuels?
Pete Moss is President of Frazier, Barnes & Associates, LLC, a Memphis based consulting firm.
7777 Walnut Grove Rd • Suite A5, Box 24 • Memphis, TN 38120 • Phone: 901-725-7258 • Toll Free: 1-877-598-7525 • Fax: 1-901-725-7245
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