NEWS RELEASE

Immediate Release:
April 1, 2008

Nebraska Corn Board contact:
Don Hutchens: 800.632.6761

Oil company profits have big impact on food prices

LINCOLN, NE – While the oil industry has been quick to blame corn ethanol and grain prices for high food costs, they fail to recognize the profits of their own companies are the bigger culprit of high food costs, according to the Nebraska Corn Board.

“Farmers have been taking it on the chin while oil companies are raking in record profits,” said Don Hutchens, executive director of the Nebraska Corn Board.

Exxon alone had profits of $40.7 billion last year, while the five leading oil companies had a combined profit of $123 billion. Ironically, the entire U.S. corn crop for 2006-07 had a gross value of $32 billion, and only 20% of that crop was used to produce ethanol.

“When you compare the profit of one oil company last year to the total gross value of an entire year’s U.S. corn crop, you can quickly understand why Congress is asking oil company executives to explain why their profits are hitting record levels while the American consumer pays for those profits at the pump and supermarket,” said Hutchens. “The oil companies are also fighting to keep $18 billion in tax breaks over the next decade.”

According to the National Corn Growers Association, a more logical explanation for this year’s food inflation can be found in examining energy pricing trends. Retail diesel and gasoline prices are up nearly 40% since January 2007 — and fuel contributes to costs at every step in the supply chain. A recent analysis by economist John Urbanchuk of LEGC found: “By a factor of two to one, energy prices are the chief factor determining what American families pay at the grocery store.”

Rep. Edward Markey (D., Mass.) is leading a Congressional hearing today (April 1), to determine how the five leading oil companies can share $123 billion profits in one year while the American taxpayer is paying record gas prices. Markey is chairman of the Select Committee on Energy Independence and Global Warming.

“We have to move beyond this oil economy,” Markey said today on CBS’ “The Early Show.” He added, “We have to move to a renewable energy economy. … We can never get out of this trap as long as the oil companies want to hold us hostage to this old agenda.”

Markey also went on to say the executives would be asked to explain how they can get energy prices down in the short run and “in the long run what are they going to do to shift the focus to a renewable energy agenda.”

According to Hutchens, “We’re anxious to hear what the oil companies have to say about renewable energy. Our perspective is that they have not shown much support and have in fact tried to shift the blame of subsidies and high food costs to the American farmer. In reality, the American farmer has worked hard for the last 30 years to show the benefits of a renewable energy source like ethanol.”

The Nebraska Corn Board is a self-help program, funded and managed by Nebraska corn farmers. Producers invest in the program at a rate of ¼ of a cent per bushel of corn sold. Nebraska corn checkoff funds are invested in programs of market development, research and education.

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