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U.S.
Senator Member: Finance, Agriculture, Energy, Ethics and Aging Committees |
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For Immediate
Release Thursday, June 12, 2008 |
CONTACT:Stephanie Valencia – 202-228-3630 |
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| Sen. Salazar Weighs in on Food vs. Fuel Debate WASHINGTON, DC – Today, the Senate Energy and Natural Resources Committee held an oversight hearing that highlighted the often misunderstood relationship between U.S. renewable fuels policy and rising food prices. As a member of the committee and a champion of the Senate-passed biofuels policy, Senator Salazar weighed in on how our increased use of biofuels is not a significant factor in the recent increases in food prices – rather rising global demand for grains, a slumping supply, and the rising cost of fuel to transport these grains around the world, are the main contributors to the rising cost of food. In fact, a new analysis by Merrill Lynch and others shows that we would be paying 15 percent higher prices at the pump without current domestic biofuels on the market. Senator Salazar’s opening statement as prepared for the committee is below: “Mr. Chairman and Ranking Member Domenici, thank you for holding this critical hearing on the relationship between our nation’s renewable fuels policy and food prices. Obviously fuel and gasoline prices are front and center in our minds today as families across the country are struggling to cope with spiraling fuel costs. Globally, however, there is an emerging food crisis that threatens to affect the lives of millions of the world’s poorest citizens. It is our responsibility to evaluate whether our biofuels policies are impacting food prices. “As I have said repeatedly over the last four years there is no quick fix to this enormous problem, but there are a number of things we can do to stem the tide of rising fuel costs in the long-run. We need to be improving our energy efficiency, investing in technologies, and developing our clean energy economy. And I am proud that under your and Sen. Domenici’s leadership this committee has produced two landmark energy bills that are huge steps in the right direction in terms of righting our nation’s energy policy and breaking our addiction to foreign oil. “At the end of 2007, Congress passed legislation to increase fuel efficiency standards in cars and light trucks by over 40 percent by 2020. This will save over 1.1 million barrels of oil a day. The bill we passed last December, the Energy Independence and Security Act, is spurring rapid development and deployment of the next generation of biofuels, such as cellulosic ethanol. The bill quintupled the existing renewable fuels standard to 36 billion gallons by 2022, 21 billion of which must be from advanced biofuels, such as cellulosic ethanol. That is more than enough to offset our oil imports from Saudi Arabia, Iraq, and Libya combined. “I was also proud of the work we did in the Farm Bill to spur cellulosic biofuels production. Cellulosic biofuels have the potential to displace 3 billion barrels of oil annually, equivalent to 60 percent of our country’s yearly consumption of oil in the transportation sector, without affecting our need for food, feed or fiber, and DOE scientists believe have the potential to dramatically reduce carbon pollution. The Farm Bill includes a provision I sponsored that provides a $1.01/gallon tax credit for the production of cellulosic biofuels. It is the first incentive for cellulosic biofuels of its kind. “Biofuels are an essential and critical part of our strategy to reduce our dependence on foreign oil. Recently many have attributed the rising cost of food worldwide to the increased use of biofuels, and corn ethanol in particular. Some are even calling for a repeal of the expansion of our renewable fuels standard that was a cornerstone of last year’s Energy Independence and Security Act. I believe firmly that we must not lose our resolve. “The so-called “food vs. fuel” issue has been a part of the discussion of biofuels from day one, and today’s full-throated debate is an important opportunity to engage in a healthy discussion of the future of biofuels. But as I’ll explain, ethanol production is not driving food prices up. In the long run, pushing forward with the RFS and the development of cellulosic biofuels – biofuels that are made from various waste feedstocks – is one of the most responsible things we can do to reduce our dependence on foreign oil. “Three principal factors have driven rising food prices, and ethanol production isn’t one of them. First, global demand for grains, particularly from China and India, is rising. Second, global supply has slumped badly due to serious drought conditions in several areas of critical agricultural production. U.S. producers are doing everything they can to boost supplies. Not counting corn used for ethanol production, we produced 17% more corn food product and exported 23% more food product overall in 2007 than in 2006. Furthermore, Ed Lazear, Chairman of the President’s Council of Economic Advisors, stated recently that ethanol accounts for less than 3 percent of the increase in global food prices. “The third major factor driving increased food prices is the rising cost of oil. Petroleum costs are embedded in every part of the global food supply chain. Recent studies by USDA reveal that for every dollar we spend on food, only twenty cents is the cost of the food product itself. The other 80 cents or so are the costs of labor, energy, transportation, etc. Simply put there is a broad consensus that in the global marketplace, U.S. corn production alone does not set the price for corn and that biofuels production has a negligible impact on the prices of wheat, rice, and other food commodities. “With the price of oil spiraling higher, it is easy to lose sight of the fact that gas prices would be even higher today if not for biofuels. Merrill Lynch estimates that we would be paying 15 percent higher prices at the pump without current domestic biofuels on the market. In addition, studies are showing that, as a result of our renewable fuels standard enacted in 2005, U.S. oil imports recently declined for the first time in a quarter century. “In my view, biofuels are a centerpiece of our quest for energy independence and we must stay the course with the RFS. I am eager to engage in this discussion and to hear the perspectives from our distinguished panel on these critical issues.” ###
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