Good morning, Mr. Chairman. I want to thank you for this opportunity to testify at your hearing to discuss the benefits of using ethanol as an oxygenate in Reformulated Gasoline.
As a senator representing the number one corn-producing state, I am a firm believer in ethanol. And with good reason. Ethanol not only helps our farmers by providing a $4.5 billion per year value-added market for their commodities, but also it improves our air quality and our energy security by reducing our reliance on OPEC.
With today's high gasoline prices, and with economic analyst predictions that oil company profits will explode by 200 percent over last year's second quarter, it just makes sense that we should be looking seriously at displacing some of our imported oil with home-grown energy.
And from reading your press releases posted on your Senate web site, I know, Mr. Chairman, that you share my concerns about dependence upon foreign energy imports, and that you support establishing a limit on these imports.
But let me share with you what I have learned from my past legislative battles regarding this subject. Even though oil companies have sought and obtained market mandates to protect domestic production in the past, now that the majors have moved their investments and employees overseas, they are no longer so keen on limiting imports.
But, today, we are here to talk about ethanol. What is odd about all the new national scrutiny of ethanol is that it is being driven almost entirely by the fact that oil companies are being told they no longer can use MTBE.
MTBE is contaminating our nation's water supply. Ethanol is not hurting our water, it's MTBE. In fact, even though I am not a drinker, I know that ethanol is little different than corn whiskey. So, if ethanol get's in the water, the worse that could happen is you might have to decide whether you want to add some ice, tonic or soda.
MTBE and ethanol are added to gasoline to meet the Clean Air Act's oxygenate requirement for reformulated gasoline (RFG). For the most part, refiners have chosen to use MTBE, a petroleum-derived chemical. Frankly to put it more bluntly, the oil industry did everything in its power through the regulatory and legal system to guarantee that only MTBE would be used. The oil industry worked for an MTBE mandate, and it was successful.
Moreover, had it not been for the insistence of officials from the upper Midwest, no RFG containing ethanol would have been sold anywhere in America, not even in Chicago and Milwaukee.
And now, the American Petroleum Institute has the gall to blame ethanol for the high gasoline prices in these cities. The truth is that ethanol delivered to Chicago/Milwaukee has a net cost of 71 cents per gallon, which is 81 cents less than the price of gasoline.
So, today MTBE is showing up in our water supplies across the country, including in Iowa where we don't use RFG. MTBE renders water undrinkable.
Now, the oil companies would like us to eliminate the oxygenate requirement and trust them to produce a cleaner-burning gasoline without oxygenates.
Trust the same folks that brought us MTBE?
Trust the folks who manipulated the courts and regulatory process to make certain consumers had no option to buy either MTBE or ethanol in reformulated gasoline?
I say no.
I am here today to tell you there is a clean air and clean water substitute for MTBE that is available this very day – ethanol - and it's made by American farmers, not by OPEC, which is driving up our gasoline prices.
The use of RFG with oxygenates has significantly reduced harmful smog-forming vehicle emissions.
According to a report by the California Air Resources Board's Clean Fuels Development Coalition Technical Committee, oxygenates in RFG have reduced air toxics by 28 percent. It has reduced carbon monoxide by 13 percent. Sulfur oxides have been reduced by 11 percent and particulate matter by 9 percent.
Carbon monoxide reductions are even greater, up to 25 percent reduction, if you use 10 percent ethanol blends. And the American Lung Association has pointed out that carbon monoxide reduces the blood's ability to carry oxygen which is especially harmful to unborn babies, infants and people with heart disease.
So why would we want to eliminate the oxygen requirement?
The problem is MTBE in our water, not oxygenates in our gasoline.
Mr. Chairman, replacing MTBE with ethanol in RFG would protect our water supply from further damage, maintain the air quality gains of the Clean Air Act, reduce our energy imports and provide a much-needed market for American agriculture.
Replacing MTBE with ethanol means increased farm income. According to the U.S. Department of Agriculture (USDA), completely replacing MTBE with ethanol by 2004 would provide a boost to America's family farmers to the tune of $1 billion per year. Demand for corn would increase by over 500 million bushels per year. Higher crop prices would reduce the need for emergency assistance payments and lower loan program spending.
Replacing MTBE with ethanol improves our trade balance. According to USDA, the average U.S. agricultural net export value would increase by over $200 million per year, while MTBE imports would decrease. The overall impact would be to improve the U.S. balance of trade by $1.3 billion per year.
Replacing MTBE with ethanol means American jobs. USDA estimates that 13,000 new jobs across the economy would be created by 2010. While over a third would be in the ethanol industry itself, another 6,400 jobs are created in the trade, transportation and service sectors. Farm sector jobs also increase, as do jobs in the food processing and energy industries.
Mr. Chairman, it is very important that Congress proceed cautiously and with serious deliberation.
First, we should demand that the Clinton Administration offer us not merely a press conference articulating a vague outline. We should demand that it present to us a specific, detailed legislative draft. There is no consensus among members of Congress at this point, and the administration is ducking its responsibility by refusing to provide leadership. You know the games they play: as Congress attempts to resolve this problem, the administration will stick its finger in the wind of public opinion and take pot shots at everything we try to do.
So, insisting that the administration place its specific legislative proposal in our hands should be the bare minimum starting point for Congress.
Second, we must not let ourselves be brainwashed into thinking that the RFG oxygenate standard is the cause of MTBE water contamination. To do so will result in Congress squandering it's time and efforts in pushing legislation that will do little or nothing to protect Americans from MTBE.
What would eliminating the oxygenate standard do to protect citizens from states like Iowa? Absolutely nothing.
You see, not a drop of reformulated gasoline is sold in Iowa. Not a drop.
Nevertheless, 29 percent of Iowa's water supplies tested were found to have serious levels of MTBE.
Mr. Chairman, MTBE is not only used in RFG, it is used all over the country as an octane enhancer. And do not believe for one moment that there is a safe level of MTBE.
Again, Iowa is a perfect example. For several years now, no gasoline containing more than 1 percent MTBE could be sold in Iowa without first posting warning labels. Let me tell you, no warning labels have been posted so no gasoline sold in Iowa has contained more than 1 percent MTBE.
Yet look at the enormous damage even a minuscule amount of MTBE has brought to Iowa's water supplies.
Whatever we do, we must protect states like Iowa from MTBE water contamination. We should be encouraging states to ban MTBE altogether, and not encouraging them to gut one of the most successful components of the Clean Air Act.
And third, Mr. Chairman, some argue that ethanol should not replace MTBE as an oxygenate until there is a greater understanding of its benefits and possible adverse impacts. I say this argument is a red herring promoted by petroleum companies who do not want to use a product like ethanol which they and OPEC don't control.
Nevertheless, and aside from the fact that I believe ethanol has been thoroughly scrutinized and has passed with flying colors, I would request that the Environment Committee use this same cautious standard in addressing whether or not to eliminate or allow waivers to the oxygenate requirement.
How can we rush to eliminate a program which has been proven so beneficial toward cleaning the air, when one, and only one, oxygenate has proven to contaminate our water?
Mr. Chairman, with ethanol, we can have clean air and clean water. We can help American agriculture and we can reduce our dependence on OPEC. That is why I am a co-sponsor of S. 2546, legislation introduced by my colleagues Kit Bond and Dick Durbin. This bill would preserve the oxygen requirement and the clean air gains we've made under the Clean Air Act, while banning MTBE. MTBE is the problem. It must be banned. We can't allow it to continue to be used even in small amounts. We've seen that first-hand in Iowa. Ethanol is the clean air, clean water alternative to MTBE.