GoodFuels

Clifford D. May: OPEC lies

Clifford D. May, a former New York Times foreign correspondent and the president of the Foundation for Defense of Democracies , has written commentary on OPEC president Chakib Khelil’s recent comments that biofuels are causing oil prices to rise that was published in the National Review today. Clearly, he says, food prices are on the rise because of high oil prices, not the production of biofuels, contrary to Khelil’s assertions.

Perhaps Kheilil believes he can get away with blaming the global energy crisis on farmers because so much of the media embraced the earlier slander that ethanol production is causing hunger. In fact, of course, it’s the other way around: Rising oil prices have contributed to higher food prices because oil is used to cultivate crops, to fertilize crops, to transport crops, and to process agricultural products.

May concludes with a discussion of oil subsidies.

What’s more, do you really think oil is not subsidized? Former CIA director James Woolsey estimates that U.S. oil companies receive preferential tax treatment worth more than $250 billion a year — and that doesn’t include the military costs necessary to keep oil supplies flowing around the world. We do that because oil is a strategic commodity: Western economies can not function without it. That will be true until the day oil is forced to compete with a variety of alternative fuels.

But that day will be long in coming if OPEC has anything to say about it. And OPEC has a lot to say about it, including Chakib Khelil’s claim that the mere prospect of competition is driving the cost of oil up, rather than providing us with the only weapon that can drive it down. It’s a lie — a big, bold, and obvious lie. But OPEC figures we’re stupid enough to believe it.

Check out the whole thing here.

WSJ on Chakib Khelil

The Wall Street Journal blog Environmental Capital has posted about OPEC president Chakib Khelil’s recent comments blaming the high cost of oil on ethanol. Here’s what they have to say:

OPEC president Chakib Khelil has a new culprit for the rising cost of oil–ethanol. Mr. Khelil says about 40% of the recent rise in oil prices can be chalked up to ethanol, which accounts for about 1% of the world’s transportation fuel. The other 60%, apparently, is due to a weak dollar and “geopolitical worries.” The problem: OPEC’s boss doesn’t lay out the logic explaining why ethanol blended into gasoline is to blame for high oil prices.

Why ethanol falls afoul of big oil producers and oil companies is easier to explain. Oil companies don’t want to be forced to shell out for a whole new infrastructure for ethanol, from pipelines to special gas pumps. And ethanol blends in gasoline do make gas supplies go further–not good news for producers at a time when high prices are already starting to dent demand for gasoline, in the U.S. at least.

Indeed, OPEC fails to give an explanation for why ethanol is causing those skyrocketing prices. Seems like the Wall Street Journal’s figured it out!

The post also talks about the open letter printed in today’s Financial Times, penned by world biofuel leaders:

The foursome call OPEC greedy, and say the cartel wants to kill U.S. ethanol mandates in particular in order to sell more oil, and make bigger profits when new oil discoveries are scarce. “New sources of energy are beginning to weaken OPEC’s grip on the world and threaten to reduce the $1.2 trillion OPEC nations will rake in this year from the exorbitant price of oil,” the letter said.

Oil exec: blaming biofuels is a red herring

Joe Petrowski, CEO of Gulf Oil, appeared on CNBC this morning to discuss oil prices.

Among his comments, he said that we must “stop attacks on ethanol“, and that taking ethanol out of the energy mix would hurt us all. He also equated daily ethanol production with that of “three OPEC nations”.

Watch the video in its entirety here. The ethanol comments begin at about 2:15.

Twin Turkeys Sighted

Amazingly, two turkey farmers in different parts of the country have the exact same views about ethanol, using the exact same words in editorials to different newspapers.

The first appeared in the Harrisonburg Virginia “Daily News Record” on June 16, written by James L. Mason, a turkey farmer from Rockingham County. The second was “written” by Peter Rothfork of central Minnesota and appeared in the Minneapolis Star-Tribune on July 8.

Both start exactly the same way:
Over the past few months, a debate has begun about whether it’s a good idea for Congress to force America to turn over one-third of our nation’s corn into ethanol. It’s about time.

Instead of engaging in this debate, however, some who support the current policy have decided to make it personal, claiming that those who want to take a second look at ethanol are out to get the American farmer. In a nation that deeply respects farmers, those are fighting words — and I know them to be false. I believe we should rethink our ethanol policy, and I am a farmer.

They then add personal information about their individual operations. After that, the letters are nearly identical.

The Minnesota Corn Growers pointed out the similarities to Minnesota TV station wanting to cover the story. When confronted with the similarities, Rothfork admitted that he “had help with the article by Sherrie Rosenblatt,” public relations vice president for the National Turkey Federation. He said the ideas and thoughts in the editorial are his own, “She helped me craft the words.”

“There are a couple of thing that set this apart from the usual ‘that’s just PR flaks doing their job’ scenario,” says Mark Hamerlinck, communications director for the Minnesota Corn Growers. “First, these are not simply letters to the editor that were generated by a letter writing campaign – in the case of the Star Tribune, this piece took up a third of their op-ed page. And, had the opinion piece been on another subject (say, the economic and security benefits of ethanol) you can bet they wouldn’t have touched it had they known it was published a month before in another paper under another name.” Hamerlinck gives the KARE11 television reporter credit for asking the turkey farmer on camera about the obvious editorial similarities.

Corn and ethanol industry representatives are urged to keep an eye out for similar turkey sightings in their own areas and use their own ammunition to shoot back.

Alabama economist says biofuels not to blame

Cattle Network has a great story over on their page. According to CN, Max Runge, an Alabama Cooperative Extension System economist, says that ethanol is not to blame for rising food costs.

“While acknowledging corn as one of the staples of the U.S. diet, Runge says many Americans overestimate its overall impact on the economy. While corn is a staple food product, it, much like wheat, is widely distributed throughout the U.S. food supply, especially processed foods — a factor that tends to dissipate its effects on prices.”

Runge goes on to say that there are other factors at work when it comes to rising prices.

“…even doubling the price of the corn or wheat that goes into these products would not, in turn, double the price of the products. In fact, packaging typically costs more than the grain that is in the product, he says.

A myriad of other factors also influence prices, including labor costs, packaging, transportation, handling and retail costs, Runge says, noting that the costs of all of these activities are rising too.

One major factor behind these price spikes is the ballooning price of oil — another factor which, much like corn, typically exerts a rippling effect throughout the economy.”

Runge hit the nail on the head - it’s rising oil prices that makes food more expensive!