Bill Clinton Fronts for Oil Industry on Biofuels
Arlington, Va. — Former President Bill Clinton warned that increasing biofuel production could hurt the world’s poor and fuel political instability around the globe.
“We have to become energy independent. We don’t want to do it at the expense of food riots,” Clinton said Thursday at an Agriculture Department conference attended by agribusiness executives, farmers, economists and others.
Clinton’s caution contrasts with the Obama administration’s bullish tone on ethanol.
Agriculture Secretary Tom Vilsack, speaking at the same conference, said there was “no reason to take the foot off the gas” when it comes to biofuels, because U.S. farmers “can do it all.”
Clinton stopped short of calling for a slowdown in U.S. ethanol production but said the industry’s growth needed to be reviewed regularly.
“What we’ll have to do is sit down year in, year out for the next 20 years and try to make intelligent decisions with three- to five-year time horizons based on the best evidence we have to maximize the availability of good food at affordable prices,” Clinton said.
He did not elaborate and did not take questions after his speech.
Vilsack said later in an e-mail that he didn’t think he and Clinton were in disagreement, noting the administration has been pushing to develop new feedstocks for biofuels. “We can do it all because we will expand available feedstock and will continue to improve yields,” he wrote.
His pedal-to-the-metal message echoed that of Earl Butz, Vilsack’s predecessor in the 1970s, who famously urged farmers to plant “fence row to fence row” because of soaring global grain demand, said Gary Blumenthal, an agribusiness analyst, who worked at the USDA during the first Bush administration. A decade after Butz’s pronouncement, the farm economy crashed.
Groups representing corn growers and ethanol producers disputed Clinton’s linkage between ethanol and higher food costs, blaming rising oil prices instead.
The ethanol industry has been on the defensive lately. Sen. Chuck Grassley, long the biofuels industry’s most powerful ally in Congress, said Tuesday that he would vote for a deficit-cutting bill even if it included House provisions intended to slow the ethanol industry’s growth.
Economists have differed on how big a factor biofuels are in food costs but say the most direct impact of higher corn prices is in the meat and dairy case. The price of corn for feed is a major cost of producing livestock.
The World Bank estimates that 44 million people have been driven into poverty since June because of rising food prices. The price of corn has risen sharply recently, topping $7 a bushel in part because higher oil prices have provided an incentive to increase ethanol production, according to World Bank economists.
Dan Glickman, who served as agriculture secretary under Clinton, said ethanol plays at least a small role in food price increases.
As it happens, the growth of the ethanol industry could be slowing over the next two years because of limits on how much of the biofuel can be added to gasoline, according to projections released by the USDA.
The USDA projected Thursday that the amount of corn used for ethanol production will grow only from 4.95 billion bushels from the crop produced last fall to 5 billion bushels from the next harvest.
That projected increase in corn use for ethanol would be the smallest since the 1990s, said USDA economist Jerry Norton.
The problem is that the Environmental Protection Agency has long had a cap of 10 percent on the amount of ethanol that can be blended with gasoline.
The EPA has agreed to raise the limit to 15 percent for 2001 and newer cars and trucks, but the agency hasn’t yet implemented the increase, and the House last week voted to block the change.
It’s not clear how many service stations will even sell the 15 percent blend, known as E15, as long as it can’t be sold for all vehicles.
“At some point you run out of gasoline to blend ethanol in, if you can only blend to E10,” said Norton. “We’re right at the edge where we run out of market.”
Chad Hart, an economist at Iowa State University, said the 10 percent limit conflicts with the government’s biofuel mandates, which will require an increasing usage of corn ethanol through 2015. For 2011 and 2012, production is expected to exceed the annual mandates.
“We’ve got policies pointing in different directions right now,” said Hart.
About 36 percent of this year’s corn crop is expected to be used for making ethanol.
Editors Note: While he is in office Bill’s up on the white house roof getting high with Willie, and now he can’t say Biofuel and hemp in the same sentence. Maybe he should stick around and answer some questions about that.