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Biofuels Lobby Asks Obama to Keep US Ethanol Mandate Amid Drought

Submitted by on August 28, 2012 – 12:49 pmNo Comment

(Platts)  Eight groups representing a cross section of the US biofuels industry asked the White House on Monday to keep the ethanol mandate in place, despite governors’ calls to shrink it in response to a drought.

The trade groups argued that altering the Environmental Protection Agency’s Renewable Fuel Standard would increase retail gasoline prices, chill investment in advanced biofuels and hurt the US economic recovery.

They added that it would not lower grain prices, as livestock producers contend.

“With so many Americans in distress from the 2012 drought, it may be difficult to accept that the flexibility provisions built into the RFS and the market itself are working to minimize the consumer impact of lower grain yields,” the groups said in a letter to President Barack Obama. “But that is exactly what is happening.”

…Analysts have said the governors’ attempts to alter the ethanol policy face extremely low odds, given plentiful renewable fuel credits that refiners can use for compliance and predictions that ethanol demand would not drop much after a waiver.  READ MORE and MORE (The Hill E2Wire) and MORE (The Wichita Eagle) and MORE (Bloomberg BusinessWeek) and MORE (The Hill E2Wire) and MORE (DomesticFuel.com)   Letter

 

Excerpt from The Wichita Eagle:  The ethanol industry has changed so much in recent years that arguments in “End ethanol mandate” (Aug. 24 Eagle Editorial) were out of date or incorrect.

First, the U.S. ethanol industry stands on its own, with no federal taxpayer support. Contrast this to the century-old oil industry, which continues to receive billions of dollars per year in tax incentives, even while many of its local leaders proclaim the gospel of “free enterprise.”

Second, America’s economic prosperity was built on freedom of choice, open competition and cheap energy. Unfortunately, after more than 100 years of government support – ranging from tax benefits to wars in the Persian Gulf to protect the oil shipping lanes – entrenched oil interests apply their enormous power to restrict ethanol producers from getting to the consumer. The renewable fuel standard, signed into law in 2005 by President Bush, is not a mandate but a much-needed market-access tool for supplying up to 10 percent of the fuel blend. Without the RFS, consumers would face a de facto mandate – for 100 percent petroleum-derived gasoline. Until the RFS opened the door to a major expansion in ethanol supplies, many consumers who wanted choice had none.

…An Aug. 23 Bloomberg article had it right: “Ethanol, the best-performing energy commodity this year, is cheaper than gasoline, encouraging refiners to use the biofuel…. A 48 cent-per-gallon discount to gasoline provides companies including Exxon Mobil Corp. and Valero Energy Corp. an opportunity to profit by blending the corn-based additive into fuel, while easing prices at the pump for consumers. Marketers use ethanol as they look for the cheapest way to boost engine performance and reduce pollution.” READ MORE

 

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