World Economy Gives America Chance to Control Energy Future
RFA says there are tradeoffs in any energy decisions.
Compiled by staff
Published: Feb 2, 2011
The Suez Canal remains open and oil continues to flow to the West, but the uprising in Egypt and political turmoil in Tunisia, Yemen and even Jordan is creating new risks for a shaky world economy and near $100 per barrel oil and higher grain prices.
Renewable Fuels Association spokesman Matt Hartwig says it's also become a double-edged sword for ethanol. On the one hand he says the U.S. can say thanks but no thanks to OPEC that we won't pay that price for oil.
"It gives America a chance to really have some control and say over the future of its energy needs," Hartwig said.
But with oil prices rising Hartwig says ethanol and corn prices are under new pressure.
"A $100 barrel of oil drives up the corn," Hartwig said. "Even though the price of gasoline may be going up and the price of ethanol may rise slightly accordingly, speculation and volatility in the oil market also has an impact in the corn market, which is a feedstock for ethanol production."
Even though ethanol uses just 2% of the world's grain supply and supplies are adequate, this situation fans the flames of the food versus fuel argument.
But Hartwig says the perception that there isn't enough supply is what's driving the current speculation in commodities.
"When you make any energy decision there are tradeoffs," Hartwig said. "The question has to be do we want to pursue options that allow us to produce more fuel domestically, making us more reliant on our own production than oil in the Middle East; or are we going to scrap that and rely solely on the good graces and good will of oil producing nations for our energy needs."
Hartwig says ethanol now displaces 10% of the nation's gasoline supply or about 450 million barrels of oil. That's more oil than the U.S. imports from Saudi Arabia every year.
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