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Grassley: Middle East Unrest Underscores Ethanol’s Value for Energy Independence

The American economy remains on unsettled footing. While there are some small signs of an economic recovery, it is still fragile. |Floor Speech of Sen. Chuck Grassley
Ethanol and Energy Independence
Delivered Monday, March 07, 2011

The American economy remains on unsettled footing. While there are some small signs of an economic recovery, it is still fragile.

The consumer confidence level seems to be increasing. U.S. factory activity is up. But, the housing market remains weak.

The nation’s unemployment rate stands at nine percent. And now, our economy is facing a significant headwind due to rising energy prices.

Since the unrest began in Tunisia, our energy markets have been rocked by the uprisings in Egypt, and now in Libya.

Libya produces only roughly two percent of the world’s crude oil, with much of that going to Europe.

The uncertainty and fear about supplies, according to oil speculators, has driven crude prices to more than $100 a barrel.

Prices at the pump were already high before the unrest in the Middle East. The events just worsened the problem.

According to the Energy Information Administration, gas prices jumped 19 cents during a one week period at the end of February. This is the second largest one-week jump in more than 20 years.

American’s are now paying an average of $3.38 a gallon for gasoline. This is 68 cents higher than this time last year.

The average cost to fill up a tank of gas is likely around $50. For a family struggling to make ends meet, these are valuable dollars spent at that pump, going overseas.

Our country is at risk. Our economy is at risk. Our nation’s security is at risk.

Our ever-increasing reliance on foreign sources for energy is undermining our nation’s economic and national security.

The activity in the Middle East over the last six weeks should be an alarm bell going off. It should be a wake-up call.

Let me be clear. I know that for our economy to grow and for business and individuals to thrive, we need access to reliable, affordable energy.

I support an energy policy of all of the above.

First, we must have access to oil and gas resources here at home.

The idea that we limit access to our own resources, which in turn leads us to go hat-in-hand to foreign dictators and oil sheiks, is ludicrous.
We currently import more than 60 percent of our crude oil needs. It doesn’t have to be that way.

I know we can’t get to energy independence by drilling alone.

But isn’t it a little foolish to have our economy held hostage by events in Libya, where only two percent of the world’s oil comes from?

The Obama Administration needs to put an end to the existing policy of a de facto moratorium through permitting.

We need to make sure that we’re doing everything we can to protect workers and the environment.

But, permitting delays and obstacles should not prevent our nation from moving forward to developing resources here at home. I also support efforts to expand the use of clean coal and nuclear energy.

I also support conservation efforts. I agree that the cheapest form of energy is the energy that doesn’t have to be used.

Here in the Senate, I’ve supported polices aimed at reducing energy use in homes and buildings through conservation and energy efficient technologies. I see the value in reducing overall energy consumption.

I’ve also been a leader in the senate in promoting alternative and renewable energy.

The supply of fossil fuels is finite.

We must look to alternative and renewable resources so we can improve our energy and national security.

This includes supporting energy from wind, biomass, hydroelectric, solar, geothermal and biofuels.

I’d like to focus on the effort to develop homegrown biofuels.

For many years, Congress has realized the need to develop an alternative to fossil fuels, particularly as a means of reducing our dependence on fossil fuels.

One of the first policies was a tax incentive to encourage the use of homegrown ethanol.

For over a hundred years, the fossil fuel industry has had a monopoly on our transportation fuel.

They built the market. They own the infrastructure. They weren’t about to use a product they didn’t manufacture, own, or profit from.

So, Congress created a tax incentive to encourage big oil to use the product and make it available to consumers. It was paired with an import tariff to make sure that only domestic ethanol receives the benefit of the tax incentive.

The tax incentive and the tariff work together to do two things.

The incentive exists to encourage the use of domestic ethanol.

The tariff exists to ensure we aren’t giving a tax incentive to already-subsidized foreign ethanol.

Together, they ensure that we don’t replace our dependence on foreign oil with a dependence on foreign ethanol.

So, the incentive was created to encourage big oil to use the product.

In 2005, Congress created the Renewable Fuels Standard. This standard was created to ensure that a minimum amount of renewable fuels was used in the fuel supply.

It was strongly opposed by big oil, but it was enacted over their opposition.

In 2007, it was greatly expanded. It mandates the use of 36 billion gallons of renewable fuel annually by 2022.

It also limits the amount that can come from corn starch ethanol at 15 billion gallons.

One of the criticisms I hear occasionally is that ethanol receives both an incentive and a mandate. I’d like to address this point.

First, while the mandate requires that the fuel be used, it does not mandate that the ethanol be produced domestically. The incentive acts as encouragement to use a homegrown product.

It increases economic activity at home and works to reduce our dependence on foreign oil.

Secondly, the mandate acts as a floor to ethanol use. Without the incentive, we would consume the bare minimum. The incentive encourages ethanol use beyond the mandate.

Some in the environmental community are quick to raise objections to the biofuels mandates and incentives.

This is a clear example of the limitless hypocrisy and intellectual dishonesty in Washington.

Many of the loudest voices against these policies are same voices who lobby me for tax incentives and mandates for wind, solar, geothermal and other renewable energy.

I’m a strong supporter of electricity generated from wind and other renewable sources. I first authored the production tax credit for wind in 1992.

Over the years, it has been expanded to include other types of resources.

Since as far back as 2003, environmental advocacy groups have been pushing for a renewable portfolio standard, which is a mandate.

So, they want the production tax credit for wind and other renewable electricity, and a mandate that it be produced. Yet, they oppose those same policies for biofuels.

It’s clearly a double standard and inconsistency that undermines their credibility on these issues.

I’ve been a champion of ethanol and biofuels for a long time. I’m well aware of the positive role ethanol is playing to create a cleaner environment.

It’s improving our economic and national security. And, it’s creating jobs and economic activity in rural America.

In 2010, nearly 90 percent of all gasoline sold in the United States contained some ethanol. The 13 billion gallons of ethanol produced in United States reduced our oil imports by 445 million barrels of oil.

After domestic oil production and imports from Canada, U.S. ethanol production is the third largest source of transportation fuel.

U.S. ethanol production is larger than what we import from Saudi Arabia or from Hugo Chavez’s Venezuela.

Without domestic biofuels, we’d be on bended knee even more than we are today begging others for oil.

Ethanol is the only reliable, legitimate alternative to crude oil. Domestic ethanol currently accounts for nearly 10 percent of our transportation fuel.

There is no other renewable fuel that comes close to achieving the economic, environmental and national security benefits currently delivered by ethanol.

Mr. President, there are other well-funded misinformation campaigns under way to undermine the only alternative to imported crude oil.

Big oil has been joined in recent years by opportunistic grocery manufacturers who hope to find a scapegoat in their desire to increase profits and raise food prices.

They continue to perpetuate the same tired, baseless arguments to try and undermine our efforts toward energy independence.

They’re more interested in protecting market share and profits than national and economic security.

Over the next few weeks, I’m going to do everything I can to educate my colleagues and the public on the benefits of domestic biofuels.

I’m not going to sit quietly while the energy, environmental and national security benefits of ethanol are scoffed at. I intend to beat back every false attack.

The American public deserves an honest, fact-based discussion about the benefits of reducing our dependence on people like Hugo Chavez and Moammar Kadafi.

They deserve to hear the benefits of reducing our dependence on dirty fossil fuels.

I look forward to continuing this education and dialogue.

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