Over the past year, food and fuel prices have risen dramatically.  The part ethanol plays in this has become as common a conversation topic as the weather, and the debate seems to be heating up as dramatically as the food prices. 

One mode of thinking is that food prices are increasing because we are using too much of our corn crops to produce ethanol.   Another camp (see here and here) blames a variety of factors, including ethanol production, but seeming to place as much or more emphasis on:

• drought in exporting companies (Australia, for example)
• high oil prices driving up transportation costs from farm to market and vice versa
• market speculation 
• a weak U.S. dollar
• subsidies
• trade barrier

Senator Dick Lugar, R-Indiana made these following statements:

Some critics have singled out corn ethanol as the primary culprit in the food crisis. They have called on Congress to scale back, or even halt, corn ethanol production.   In effect, they ask us to choose between feeding the hungry or producing biofuels. But increased demand for corn-based biofuels is just one of numerous factors that have contributed to higher food prices. Compared to last year’s 146 percent price increase for wheat and 70 percent increase for rice – neither of which is used for biofuels — the 46 percent increase in corn was relatively modest.

While we should understand the impact of biofuels on food supplies, we must not lose sight of why our government is attempting to stimulate biofuel use.   Chairman Biden and I have held at least a dozen hearings in the last few years that have highlighted the extreme national security and environmental risks of our dependence on imported oil. The United States deliberately undertook a program to develop biofuels because it is one of the best immediate responses to our acute energy vulnerability and to the problem of climate change.   Cutting ethanol production now would leave us even more vulnerable to the political whims of governments that control 80 percent of world oil reserves. The enrichment of these governments obstructs many of our major foreign policy objectives, including our efforts to end the genocide in Darfur, stop Iran’s nuclear program, combat terrorism, and bring peace to the Middle East. Rather than cutting production of ethanol, we should replace the current ethanol subsidy system with an oil-price floor that will provide assurances to long-term investors in all renewables. And we should eliminate the import tariff on ethanol to admit supplies from Brazil made from sugarcane.

If corn biofuel production is curtailed, we will see additional pressure on global oil prices and a withering of the nascent biofuel distribution infrastructure. This infrastructure is essential if we are to hasten the commercialization of cellulosic technology, which promises abundant ethanol from non-food sources like switchgrass and forest wastes. Cellulosic technology has the potential to far outrun corn in the volume of ethanol produced, and it can do so at a lower cost. Wide commercialization of cellulosic ethanol would radically improve the energy outlook for rural areas all over the world.

But waiting for cellosic ethanol technology will be on the public’s back burner if they think they’re starving. 

This is a big issue for North Dakota, where agriculture and energy in many instances have become one industry.  The sharp debate reminds me of global warming.  Maybe it’s a new trend.  One that we need to deal with. 

Sen. Lugar’s suggestion that we replace corn ethanol subsidies with an oil price floor is intriguing.  The problem with any ethanol issue is that it’s difficult to see down the road because so many factors are involved. 

North Dakota might try anyway.  On May 28, Gov. Hoeven and the Bismarck-Mandan Chamber will be hosting a roundtable on energy and environmental policies and how they affect the state.  It should be interesting.