Agricultural Secretary Tom Vilsack told an audience on RFD TV last week that agriculture created $135 billion dollars in exports last year and this created a $47 billion surplus in this sector’s balance of trades.
“Biofuels were a major part of offsetting a portion of the huge trade deficits in the manufacturing and oil sectors,” Vilsack said.
Renewable energy is an opportunity to reduce trade deficit
According to the U.S. Commerce Department, our trade deficit for the month of March 2011 was $48 billion dollars. The trade deficit is the difference between what we sell overseas versus what we buy. Exports actually increased in March to $172 billion dollars, the highest level since 1992, but that good news was wiped out due to the high cost of imported oil which topped $100 a barrel in March.
The Obama administration has set a goal of producing 36 billion gallons of biofuels a year. Vilsack said “If we meet our goal of 36 billion gallons of homegrown biofuel, that would replace the 17% of our oil that is currently imported from the Middle East and that would have a major impact on our balance of trade deficit,” he added. “This is a mater of national security,” he emphasized.
What are biofuels and do they drive up food cost?
Biodiesel is a diesel fuel made from agricultural waste and crops grown on farms and sold to small local refineries that convert them to diesel fuel. These sources do not compete with the food and animal feed as much as corn.
Biofuels include ethanol and biodiesel. They are fuels that are made from agricultural products instead of oil. Ethanol is added to gasoline to replace a portion of the oil based gasoline. Most of it is currently made from corn, but other crops can be used including switch grass.
Vilsack said that studies show that use of ethanol already keeps gasoline from being $0.89 per gallon. Fuel would be higher if ethanol was not used due to the fact it reduces the overall amount of oil required to fuel our cars and trucks.
Critics of ethanol claim that using corn for fuel raised the cost of food and animal feed. Vilsack said these claims were exaggerated. “The waste from ethanol production actually becomes animal feed”, he said, “offsetting some of the corn diversion”.
In response to questions about ethanol increasing food cost he pointed out that the vast majority of the cost of food is not the produce grown by the farmer, but the cost of transportation and distribution. Reducing the cost of transportation (fuel) would reduce the cost of food. Food costs would be higher today if ethanol were not saving the 89 cents a gallon.
Biofuels benefit the environment, the economy, and cut the deficit
The biofuels industry creates jobs in rural communities and boosts the agricultural industry that has suffered a decline for a century. Taxpayers spend billions a year on agricultural subsidies each year. If these resources were diverted into developing these fuels, it would increase employment, stabilize markets, raise farm prices eliminating the need for farm subsidies according to Vilsack.
Secretary Vilsack said that “The US biofuel industry and ethanol are responsible for 400,000 jobs currently, and if the Obama administration’s goal of producing 36 billion gallons of biofuel annually is achieved, it would create an additional 1,000,000 jobs in rural America, and increase our agricultural exports significantly,” Vilsack said.
Development of the biofuel industry not only reduces our dependence on foreign oil, it decreases our balance of trade deficit. It makes enhances our national security because we do not have to depend on foreign countries for the fuel we grow on farms. And it does not run out—there is a new crop each year.
Biofuels burn cleaner than oil reducing pollution and greenhouse gasses. They require less energy to extract and produce less pollution in production than drilling for oil and refining it. And, all 50 states can participate in this industry, not just a few oil patch states.
Even though biofuel development would be a good thing for rural America, and our balance of trades, and the environment, and national security, it is not likely that Congress will take advantage of this opportunity. Republicans, who have received $21 million in campaign contributions from oil companies, are not likely to support funding increases to biofuel production. They have already rejected a bill to eliminate subsidies to big oil, and have signaled that they want to eliminate current subsidies to ethanol and biofuels next.
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