Ethanol
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Mr. THUNE. Mr. President, tomorrow the Senate will vote on a cloture motion that deals with an amendment that would do away with a tax provision that was enacted many years back by Congress but was extended just this last December. In fact, there were a whole series of tax extenders that were passed by the Congress in December of last year, but this particular one, the volumetric ethanol excise tax credit, was also extended. It was extended until the end of the year 2011. December 31 of this year is when it would expire with the amendment we will be voting on tomorrow--or at least the cloture motion we will be voting on is with regard to an amendment that would eliminate that and end it now.
There are a number of problems associated with that approach, one of which is this issue of economic certainty. We have lots of people across this country who have made investments. We have lots of jobs that are impacted by this industry. In fact, if you look, there are 204 plants, ethanol plants, in America today, spread across 29 States and on the order of about half a million jobs--all of which, I might add, are American jobs--you have half a million American jobs impacted by this industry. The ironic thing, too, is coming on the heels of an announcement last week that Venezuela, Libya, and Iran will block OPEC from producing more oil to relieve gasoline prices, we continue to be held more and more hostage every single day by our addiction to foreign oil.
We send $1 billion a day outside the United States to purchase foreign oil--$1 billion every single day to purchase foreign oil. The ethanol industry, which now represents about 10 percent of the fuel mix in this country, displaces 445 million barrels of oil every single year. That is the equivalent of $34 billion that we don't send overseas--445 million barrels of oil displaced every single year, $34 billion that we don't have to spend purchasing foreign oil. So this is an issue that has a direct bearing on the issue of energy independence, the issue of continuing what I think is a very dangerous dependence on foreign sources of energy, foreign oil, and has a direct bearing as well on the price consumers pay at the pump. Clearly, if you took 10 percent of the fuel mix out of production or out of that mix, you would put an additional pressure on the price that currently is being paid by consumers.
In fact, there was a study done by Iowa State University that said, in 2010, if you took away the contribution ethanol makes to the fuel mix in the country today, you would see gasoline prices increase by 89 cents per gallon. When you are already facing $4 gasoline prices in this country, which I think is having a profound impact on our economy and particularly on consumers who, day in and day out, are having to deal with these high prices, it seems ironic that we would be looking at legislation and policy that would further drive up the cost of gasoline. We ought to look at ways we can reduce it, and this clearly would have the opposite effect.
A few weeks ago there was a proposal to put additional taxes on oil and gas or at least to change some gas policy with regard to oil and gas which many of us argued would add to the cost of gasoline in this country. It would essentially, in effect, be raising taxes on gasoline.
This proposal would have the same effect. It would increase the cost of energy and obviously impact many of the jobs to which I just alluded. It would also break faith with the commitment made by this Congress last December when we extended the VEETC, the volumetric ethanol excise credit, for another year. We have a lot of folks who made investments, you have people across the country whose livelihoods and jobs depend upon this, and I think it makes sense, when we put policy in place and we say it is going to be in place for a certain period of time, that that be honored.
Having said that, I have been working closely with my colleague from Nebraska and others of our colleagues on both sides of the aisle, Republicans and Democrats, on a proposal that would reform the VEETC and move us in a direction that puts us on a pathway or a trajectory into the future that will take greater advantage of this contribution that is being made by biofuels to our country's energy independence and also phase out the VEETC tax credit but that does it in a way that does not impact and disrupt in a way that this would, where you say you are going to end this today. As I said, you have lots of people who made investment decisions based on current policy. You would change that policy immediately and abruptly, but that is not the right way or correct way to go about this. There is a better way. That is what my colleague from Nebraska and I have been working on. I hope my colleagues in the Senate will vote tomorrow against this attempt to end this abruptly and to disrupt this market and do tremendous harm to an industry that is contributing, in a significant way, to America's move toward energy independence and is helping to keep gas prices lower than they would otherwise be were it not for the 10-percent contribution ethanol makes year in and year out to our energy.
So there are lots of reasons why we think it is a bad idea to move forward with the amendment that will be offered tomorrow and the cloture motion that would get on that amendment. I hope my colleagues will defeat that cloture motion so we can work on a more responsible, reasonable way that phases out the VEETC and, in a responsible way, that would allow those who have made investments to be able to plan accordingly.
I would simply say, as we get into that debate tomorrow, this is an issue which has ramifications for our economy because of the price of fuel and the impact ethanol has on the price of fuel in this country. It has an impact on the old issue of energy independence and whether we are going to continue to be held hostage and over a barrel by oil we have to import from other places around the world. Of course, it has implications as well for just the jobs that are created here at home, American jobs that could very well be lost if we move down a path that, in my view, would be very harmful for this industry and its ability to create jobs.
I have my colleague from Nebraska here as well this afternoon and I would welcome his thoughts on this subject and would like to enter into a dialog with him about the impact this industry has on his State of Nebraska--and not just the impact it has on Nebraska or South Dakota but the impact it has on this country by creating jobs, by lessening the dependence we have on foreign sources of energy, and by keeping gas prices at a more reasonable level than we would otherwise see if it were not for the contribution ethanol makes to our fuel mix.
I am going to yield to the Senator from Nebraska for his observations about this subject.
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Mr. THUNE. Mr. President, if I might just say to the Senator from Nebraska, because I am wondering if perhaps in his discussions with farmers and ranchers in his State--I am sure the issue which he alluded to, which I think is an important one, comes out--I wonder if other people around the country realize, when we make a gallon of ethanol, we take a bushel of corn--which is a remarkable thing that we have gotten to, where the technology enables us to do that--we produce 2.7 gallons of ethanol from a bushel of corn. We have almost 3 gallons of ethanol from a bushel of corn which goes into our fuel supply and represents about 10 percent of all the fuel we use.
I wonder if a lot of people realize that one of the byproducts of that, as the Senator from Nebraska has mentioned, is something called dried distillers grain. The DDGs, as we refer to it, is something that is then used to feed livestock.
Now, a lot of people think there is this whole corn debate about food versus fuel, but I don't think most Americans realize that only about 12 percent of our corn crop in this country actually ends up in foods. It is either consumed directly, such as corn chips, or indirectly, such as high fructose corn syrup. But one-third of the grain that goes into ethanol production comes out as dried distillers grain, these DDGs, and for each bushel of corn used in the ethanol-making process--as I said, the 2.7 gallons of ethanol--18 pounds of DDGs and 18 pounds of carbon dioxide.
If we took, let's just say, for example, 5 billion bushels of corn used for ethanol production in a year, the feed product equivalent of about 1.7 billion bushels of corn is returned to the livestock food chain as an ethanol byproduct. So we take about one-third of all of the grain that is put into the process to make ethanol, and that comes back in the form of something we feed to livestock and something that has been a great source of protein for livestock producers in this country. I don't think most Americans even realize we are not just talking about the fuel component; we are not just talking about that liquid we use to blend with petroleum products and get ethanol in this country; but there is also this other byproduct which is essential for livestock producers to feed their livestock.
I am wondering if, in the conversations the Senator from Nebraska, I assume, has with his farmers and ranchers--of course, they are very familiar with this--the average person around this country understands this.
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Mr. THUNE. Mr. President, in closing, I wish to, first of all, thank the Senator from Nebraska for joining us. He has a great wealth of experience, not only having grown up on a family farm in his early years but representing his State as a mayor, as a Governor, and then representing our Nation as the Secretary of Agriculture. I recall working with him when he was the Secretary of Agriculture on a lot of these issues.
One of the things that strikes me about where we are today relative to where we were then is the prosperity that has returned to the agricultural sector in our economy, to rural America. We can't say the biofuels industry has been solely responsible for that, but certainly a contributing factor. We have seen growth in the economy in the Midwest.
Again, what I would point out about this, which is so important for people to realize is that these are American jobs. This is our home-grown industry. We are either going to get fuel in the United States or we are going to buy it from some foreign country. That is what we have been doing, and that is what we continue to do to the tune of $1 billion every single day. So to the degree we can promote domestic energy production in this country and add to the supply in this country, which is what biofuels does, it is for the American consumer and, obviously, good for America's economy and America's dangerous dependence we currently have on foreign energy.
So the proposal the Senator from Nebraska is a cosponsor of and that he and I have worked together on and that we will file as a bill today will present an alternative to the approach that will be advanced, or that they will attempt to advance tomorrow, which is to just right now, in a very disruptive way, abruptly end something that we just voted on in December to put in place. We have people who have made investments in it, and it has made a tremendous impact on jobs in this country.
The approach the Senator from Nebraska and I are advocating I believe is a reasoned approach. It is forward looking in the sense that it promotes the next generation of biofuels, advanced biofuels, and cellulosic ethanol. In the same way the Senator from Nebraska mentioned, it gets us to where we have more choices for American consumers when they come into a filling station by investing in some of the pumps out there and giving consumers more choices.
Then, finally, as the Senator from Nebraska said, it also puts money toward the debt, toward deficit reduction, and phases out the tax credit that is available today to ethanol producers in this country. It is a reasonable, responsible and, as the Senator said, measured way of dealing with this, not the way that is being proposed by the vote we are going to have tomorrow.
So I hope our colleagues will join us in working in a constructive way to continue to grow this industry and do it in a way that creates jobs for Americans and lessens our dependence on foreign nations.
I yield the floor.
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