Western New York -- We're burning food to fuel our cars. Think about that for a second. A growing number of folks are saying that's crazy, yet the production of corn ethanol in this country continues. Now, as production ramps up locally at Orleans County’s Shelby Ethanol Plant, the critics are lining up to take their shots.
The Great Ethanol Debate begins with the fact that it was once billed as a solution to our energy crisis. Now it's being blamed for much more, beginning with higher food prices and ending with our struggling economy as a whole.
From Orleans County to Your Gas Tank
In December production of corn ethanol at this Orleans County plant began. By this December nearly 60 million gallons of fuel will be produced. The Sawyer Family's ethanol plant is the first and only one in operation in the Northeast United States; but it's far from unique in this country.
"Right now ethanol production in the United States represents 6% of the 140 billion gallons of gasoline that we use every year," Mike Sawyer of Western New York Energy explained.
That's gasoline being used at stations like the 12 Corners Mobil in Brighton. That station’s owner, Mike Davis, made the conscious decision to retro-fit his service station for ethanol fuel last year.
"Being frustrated with the market the past couple years, our volume's down, people are buying less, they're searching out cheaper places to get fuel,” Davis said of his decision to offer ethanol fuel. “It's just another niche we can offer to bring business back here."
As more Flex-Fuel, or "ethanol friendly" cars hit the road, business is coming back to Davis’ Mobil station. And at $2.99 a gallon for ethanol fuel, it makes sense for many consumers.
"I like it in my car,” Kevin Karnisky of Webster said during a routine fill-up of ethanol fuel at 12 Corners in Brighton. “With gas prices this high, four bucks for regular, $2.99 for ethanol, I can't beat it."
From Local Farms to Your Grocery Store
Getting ethanol to Davis' pumps in Brighton begins with local corn growers, like the Hansen Farm in Stanley, Ontario County. Behind the growing choices farmers make is the fact that because ethanol production in the U.S. is on the rise, so to is the price of corn.
"The price of corn is definitely playing a role in the higher prices at the supermarket,” Jo Natale of Wegmans explained.
So while some consumers are paying less at the pump, all of us are paying more at the store. "Corn is an ingredient in so many products. Just read the food labels," Natale said.
However, it goes beyond food labels. Field corn, not the sweet corn we often eat, is an ingredient in food production too. Field corn feeds livestock like dairy cows. Corn costs more, then feeding cows costs more, and in the end, milk costs more.
Wegmans reports a gallon of fat-free milk cost a $1.69 in January 2006. Today that same gallon costs $2.59. And it doesn't stop at corn. "Farmers have stopped growing wheat in order to grow corn for ethanol," Natale said.
That market shift can help explain other cost increases. Two years ago, a loaf of Wegmans Giant White Bread cost $0.99. Today, it's a $1.19. While corn ethanol can be blamed for many of the price increases we’re experiencing, the fact of the matter is corn isn't entirely to blame.
"It is not the only factor. In fact, that's what makes this such a difficult period -- because you have so many factors impacting food prices," Natale said of rising food prices.
Rising global demand for food from developing countries is one factor, particularly countries in the Middle East and Southeast Asia, according to Natale. A weak American dollar is leading more domestic growers and producers to export their products for a better price. And of course, there's the cost of crude oil itself.
"All of these factors have created a perfect storm," Natale said.
How Much Blame Does Ethanol Deserve?
That perfect storm of rising prices is one that more and more critics seem to be placing on the shoulders of ethanol. An assignment of blame that some, including the Sawyer Family, claim is not warranted.
"I often say, we used to get credit for things we didn't deserve,” Sawyer said of ethanol’s early hype. “Now we're getting blamed for things we're not responsible for."
The US Department of Agriculture reports a bushel of corn cost under $2 in 2005. Three years later, that same bushel sells for $6. Nobody, including proponents of ethanol production, questions that demand for ethanol is one factor that explains that increase. Where the debate begins is in quantifying how much of a role ethanol plays in those costs; as compared to other factors such as global demand, a weak dollar, and fuel costs.