Disclose Act - Motion To Proceed

Floor Speech

By:  Chuck Grassley
Date: July 26, 2010
Location: Washington, DC



Mr. GRASSLEY. Mr. President, last week there was a news conference by a group of outside people who attacked ethanol, and then the senior Senator from Arizona gave a speech on that subject last week. I told the senior Senator that I was going to have something to say about ethanol this week; I didn't tell the news conference people that I was. So it seems to be that time of year once again. Without fail, every few months or so, we have big oil on the one hand and big food interest groups on the other hand start a misinformation campaign in an effort to denigrate the U.S. biofuels producers. In other words, they are attacking renewable fuels.

Last week, almost as if on cue, a group opposed to domestic efforts to reduce our dependence on foreign oil began their usual song and dance. A
press conference led by the Grocery Manufacturers Association and other special interest groups was held to malign the benefits of homegrown renewable fuels. Don't forget that this is the same group of folks who, a few years ago, waged a high-priced, inside-the-beltway smear campaign against ethanol for allegedly leading to higher food prices. At that time, the price of corn was going up because there was speculation in commodities, the price of oil was going up, and so the grocery manufacturers decided: We have to have an excuse to increase the price of food--20 percent, roughly. Well, you know what, the price of grain came down, but the price of food has not come down. So I think it was simply a diversionary tactic to get away with what they maybe would not have gotten away with with the consumers.

Well, I think 2 years ago, maybe 3 years ago, that myth was roundly dispelled, but I want to keep reminding people that there was that campaign out there. Economists proved what Iowa farmers and our Nation's farmers knew to be true: The higher cost of corn was responsible for just a tiny fraction of the increase in food prices. So while food manufacturers wanted consumers to believe that corn ethanol was doubling or tripling their grocery prices, nonbiased observers knew that the corn input costs were just pennies of the retail price of food.

However, with dozens of multibillion-dollar corporations and profits to protect, it is not surprising to see this group--or maybe I better say these groups--attack our country's farmers and ranchers, who are working to produce our Nation's food, our Nation's feed, our Nation's fiber, and now, with renewable fuels, producing fuel that you and I burn in our car tanks almost daily. And farmers can do that. They can do all of that. They are doing it right now. This year, we will have the largest corn crop this country has ever produced, and doing it on 3 million less acres of cropland.

So these same groups are at it again. They see new opportunities to undermine our domestic biofuels industry, and they have a bottom line to look out for and pockets to line. They are now arguing that our Nation cannot afford government policies to foster the growth of renewable energy. In other words, they are arguing that the cost of energy independence is too high and we cannot afford it. They would prefer that we increase our reliance on fossil fuels and imported crude oil. The unfortunate outcome of such attacks, however, is that less informed individuals begin to believe this misinformation. So it is time that we review the true cost of imported fossil fuels.

In 2008, Americans sent over $450 billion to foreign countries to satisfy our demand for oil. At $80 a barrel--and I suppose oil is, I think, roughly $75 now, but if it is $80 a barrel, we will send nearly $350 billion overseas, out of this country, this year for oil.

We rely on foreign oil to meet 60 percent of our oil demand. But do not forget, much of the world's oil reserves are located in the volatile and very unpredictable Middle East.

According to the Energy Information Administration, oil price shocks and price manipulation by the Organization of Petroleum Exporting Countries cost our economy about $1.9 trillion between 2004 and 2008.

Our dependence on imported oil accounts for about one-half of our trade deficit--one commodity--a very important commodity for us, but it accounts for one-half of our trade deficit.

The Federal Government's support for homegrown ethanol equals less than 2 percent--just less than 2 percent of the money we will send to Canada, Saudi Arabia, Mexico, Venezuela, Nigeria, and other countries where we import oil.

The domestic ethanol industry supports 400,000 green jobs in the United States. Last year, ethanol contributed over $50 billion to our gross domestic product. It contributed $8.4 billion in tax revenue to the Federal Government. The incentives we provide for ethanol production lead to a surplus of tax revenue for the Federal Treasury. So which is the better bargain--being dependent on foreign countries for 60 percent of our energy needs at a cost of $350 billion or keeping this money at home, creating green jobs and increasing our national and economic security? I believe the choice is very obvious.

Up to this point, I have only considered the economic cost. There are other costs. I will put up a chart with one of the environmental costs. This chart depicts a small example of the environmental cost of our dependence upon foreign oil. The first photo, the lower photo, is the one we are all too familiar with, the explosion and the ensuing oilspill at BP's Deepwater Horizon oil rig. The other photo might look like Mars or the Moon, but it depicts land in Canada where oil is being extracted from tar sands. The fact is, fossil fuels are getting more expensive to extract and are likely to come at greater environmental cost. That is the negative aspect, environmentally, beyond the economic issues I have discussed.

We have an alternative. That alternative, which the next chart shows, is homegrown, renewable biofuels. The chart shows the cornfield on the left, and where we go to the gasoline station to get the renewable fuels to power the car on the right. Today, ethanol accounts for 10 percent of our transportation fuels. No other fuel alternative comes close to ethanol's contribution to a clean environment and less dependence on foreign energy and less dependence upon fossil fuels. Domestically produced ethanol contributes more to the fuel supply than all imports except Canada. More ethanol means less greenhouse gas emissions. A University of Nebraska study found that ethanol reduces direct greenhouse gas emissions by 48 to 59 percent compared to gasoline. Ethanol production continues to improve, and increasing crop yields means we are producing more fuel from less grain on fewer acres.

Let me repeat something I said earlier: Probably 13 billion bushels of corn, the largest crop ever produced in the United States, and we have 3 million less acres in crop production this year compared to a year ago. Ethanol producers are reducing energy and water usage. So the production of ethanol is becoming more efficient.

Finally, it is important we consider the national security cost of our dependence upon foreign oil. I will put up a chart about the Middle East. The Middle East accounts for 20 percent of U.S. oil imports; 17 billion barrels of oil are shipped each day through the single most important shipping chokepoint; that is, the Straits of Hormuz out of the Persian Gulf. In fact, the military people say that is one of the serious problems in dealing with Iran, if they decided to sink ships there, what they could do economically to the rest of the world and what they could do national security wise to the rest of the world. They have threatened that. They have never done it, probably because their livelihood depends on it as much as the rest of the world. But it is still one of those chokepoints. On average, 15 crude oil tankers pass through the Straits of Hormuz every day, with much of that oil headed to the United States.

We have two other large oil shipping chokepoints; one at the Suez Canal and the other one at the Gulf of Aden at the bottom of the map. To determine the true cost of America's dependence on foreign oil, it is important to understand the cost to the taxpayers of defending and protecting these shipping lanes. A New York Times editorial, in the late 1990s, calculated the true cost of a gallon of gas, including the military cost of making sure it can get from the oil wells of the Middle East to the United States at $5 a gallon. Last week, I questioned four-star retired U.S. Army GEN Wesley Clark on the true cost of gasoline, when he appeared before the Committee on Agriculture. He estimated it to be around $7 to $8 a gallon today, 10 years later than the New York Times editorial.

Homegrown ethanol produced in the Midwest--I suppose anyplace in the United States, but most of the corn is produced in the Midwest--doesn't need a military escort to the gas stations on the east or west coasts such as oil from the Middle East does. Homegrown ethanol does not need the Department of Defense to protect its transport from our farm fields to consumers. Again, our Nation's investment in ethanol is a real bargain. It is increasing our economic and national security. That is why it is important we continue to support this industry.

Some have claimed it is a mature industry and it no longer needs our help.
This statement ignores the fact that ethanol is competing with a century-old industry dominated by big oil, which itself has received billions of dollars from the taxpayers over many decades and for decades longer than the ethanol industry.

Getting back to the detractors I referred to, most often the people who held the press conference a week ago today denigrating oil, these ethanol detractors continue to undermine these efforts. One organization estimates that a lapse in the tax incentive for ethanol would shut down 40 percent of the industry and result in the loss of 112,000 green jobs. That is 112,000 jobs that rely on the production of ethanol. We can't allow ethanol to follow the path of biodiesel which has essentially shut down because this Congress failed to extend that tax incentive that ran out last December 31. While President Obama spoke in his address on Saturday about investing in homegrown clean energy, 45,000 biodiesel jobs have vanished because of the lapse of the biodiesel tax credit. It is inexcusable.

President Obama touted the goal of creating 800,000 clean energy jobs by 2012. Why not take action today to extend the lapsed biodiesel tax credit and immediately put 45,000 people back to work? The same thing could happen to the ethanol industry, if we fail to extend the tax incentive which runs out December 31 this year. If we undermine ethanol, we are putting out the welcoming mat for dictators such as Hugo Chavez. In fact, last night on the television, it said Chavez is talking about maybe not selling oil to the United States.

Then, last week, as I referred to in my speech--and I told the Senator from Arizona I was going to speak on ethanol this week--we had the senior Senator from Arizona question the wisdom of domestic renewable fuel incentives. He was quoted as saying:

Maybe we will stop this damned foolishness called ethanol subsidies. It's one of the greatest rip-offs that takes place on the American taxpayers.

So to those who would do away with our domestic ethanol production, I have one question: Which country should we look to for 10 billion gallons of fuel? Would we want to go to Saudi Arabia? Would we want to go to Venezuela? Would we want to go to Nigeria? Whom would we rather support with our hard-earned money? I want to ask this question: Would we rather support Hugo Chavez or the American farmer? Would we rather support Chavez, which is an insane thing to do? Sending money to someone who buys guns to fight us is insanity. In this chart we have these two people on the left, Chavez and the President of Iran. We have the farmer of America on the right. Where would we want to get our energy from? Whom would we want to rely on?

It is pretty easy to answer that question. We shouldn't be reducing our use of renewable fuels. We should be increasing it. We should produce all we can from corn and from the biomass that is left over from corn and from grasses and from wood waste. We should increase the use of biofuels by mandating the production of flex-fuel vehicles and increasing the availability of blender pumps.

Ethanol is here today. It is creating a cleaner environment. It is keeping money at home in our economy and increasing our national security. Undermining the only renewable fuel that has the proven ability to accomplish these goals would be insanity, a little bit like the two people we see on the left but not the person on the right. The person on the right is the backbone of the American economy because nothing has contributed to the national wealth except what comes from the national resources of the country.

Bottom line: Ethanol is good for America, but let's segment that. It is good for agriculture. It is good for good-paying jobs in small town America, where these renewable plants are located. It is good for the environment. It is good for lessening our dependence on foreign oil, which helps our trade balance, which helps our national security. There isn't another issue Members can come before the Congress with that has no negatives and all positives. In other words, everything about ethanol is good, good, good.

I yield the floor.


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