Gasoline prices fell dramatically this spring, one of the few bright spots for consumers this year. The oil feud between Russia and Saudi Arabia that began March 8, led to a 34% drop in domestic oil prices. Of course, the COVID-19 pandemic is the other driving factor.
Around the globe, people were issued stay-at-home orders and businesses temporarily shut down, tamping gasoline demand. But we know this oil and gas price drop is only temporary. Big oil companies will raise the price of gas quickly, as demand returns. In Montana where I live, I’ve already noticed fuel price increases of $0.60 a gallon in the past three weeks.
September 2019 marked the first time the United States became a net exporter of crude oil and refined petroleum products. Oil is non-renewable, and big oil companies are mortgaging our country’s future energy independence for short-term profits. Most of the U.S. oil exported is from Gulf of Mexico fields, where oil rights are owned by all U.S citizens.
But before 2019, the U.S. had been dependent on foreign oil for decades. I remember the oil embargo of 1973, when the price of gas quadrupled. I was not old enough to drive, but I recall gas stations were in a quandary. None of the pump readouts were able to register higher than 99.9 cents per gallon, therefore stations advertised gas by the half-gallon. The oil embargo was the catalyst behind the 1970s ethanol push. America decided we needed to become energy independent, and what was then referred to as the ethanol Minnesota Model, would put us on the path to energy security. The model was an agreement between local, public and private parties, whose goals were to retain profits locally, and provide jobs while increasing value to agricultural products. All while strengthening rural communities.
In 2017, U.S. Department of Agriculture data revealed American farmers planted 91.1 million acres of corn and harvested 14.6 billion bushels. Compare that to 1973, when we planted only 72.2 million acres and harvested just 5.7 billion bushels. The increase in bushels per acre is because of better farming practices and technology. And, the increase in acres can be attributed directly to ethanol. Today in the U.S., 40% of the corn crop is used in ethanol manufacturing, strengthening energy independence for America. It creates another market for family farmers and rural jobs, while revitalizing small towns. The dry distillers grain that remains after ethanol processing is used for feeding livestock.
Ethanol benefits American consumers because it’s less expensive to produce than gasoline. Prior to COVID-19, ethanol plants in Iowa could produce a gallon of ethanol for about $0.37 less than a gallon of non-ethanol gasoline, according to the Renewable Fuels Association.
Ethanol also improves gas octane levels, increasing octane ratings for regular from 84 to 87, the standard for automobiles. In fact, NASCAR has been running on E-85, which contains 15% ethanol in all their races for the past few years. That tells you it still gives engines plenty of power. And, of course ethanol also reduces greenhouse gases coming from the tailpipes of our own vehicles.
The Clean Air Act of 1970 was amended by the Renewable Fuels Standard in 2005, and incorporated changes in 2007 through the Energy Independence and Security Act. This established targets for renewable fuel gallons until 2022. However, the U.S. has not reached those targets since 2013. In fact, for 2020, the EPA established the gallons rating at only 67% of 2007 EISA targets.
We need to be vocally positive about the expansion of ethanol in our fuels. It is good for family farmers because it provides more markets and livestock feed by-products. It is also good for consumers, because it lowers gasoline prices. The environment benefits, because ethanol lowers greenhouse gases. And, finally it’s good for national security, because it helps America maintain its energy independence. These are topics we should raise to our federally elected officials. We must remind our senators and representatives about the benefits of ethanol and that those elected officials work for us, and not big oil companies.
—Bruce Shultz is vice president of the National National Farmers Organization and is a cow-calf producer from Raynesford, Montana.
