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  • No Texas Relief From The Failing Ethanol Mandate

    Today, Environmental Protection Agency Administrator Stephen Johnson denied Texas its requested waiver of the ethanol mandate. While a disappointment, the decision was not unexpected as the Bush administration continues to defend its ethanol policy and argue that its adverse economic impacts are minor. In any event, the real answer is not state-by-state, year-by-year piecemeal reprieves of this ill-advised mandate, but legislation repealing or at least scaling it back.

    The 2007 energy bill requires that 9 billion gallons of renewable fuels, mostly ethanol derived from corn, be added to the fuel supply in 2008. The mandate goes up in future years, and eventually will require 15 billion gallons of corn ethanol and another 21 billion of other agriculturally based renewable fuels by 2022.

    The diversion of corn from food and feed to fuel use has contributed significantly to the rise in corn prices, which have more than doubled in recent years. This has posed a hardship for many, including Texas cattlemen who rely on corn as feed. It has also contributed to higher food costs, both here in the U.S and throughout the world. At the same time, the ethanol mandate has not provided relief at the gas pump, nor has it delivered the promised environmental benefits.

    The federal law creating the mandate had provisions allowing individual states to apply to EPA for a waiver based on economic hardship. Discretion lies with EPA in consultation with USDA and other agencies, all of whom continue to defend the mandate and make the claim, contradicted by many food aid organizations as well as the World Bank, International Monetary Fund, and various UN bodies, that the impact of the mandate on grain prices has been small. Thus, the denial was not unexpected.

    The real answer is not temporary waivers from bureaucracies but a permanent legislative fix. In truth, the mandate is irrational – the extent to which ethanol is mixed into in the gasoline supply should be left to the market, not to Washington and its arbitrary targets. If the mandate cannot be completely repealed, as H.R. 5911sponsored by Rep. Jeff Flake (R-AZ) would do, at least we should consider, as has Sen. Kay Bailey Hutchison (R-TX) in S.3031, freezing the use of corn ethanol at current levels rather than allowing it to increase in 2009 and beyond.

    Posted in Energy [slideshow_deploy]

    3 Responses to No Texas Relief From The Failing Ethanol Mandate

    1. VC, Ashburn, VA says:

      I often hear commentators cite rising food prices when criticizing ethanol. But what is worse: The food crisis or the energy crisis? If you answer that question honestly, I think you'll see the need for clean, reliable, American corn ethanol to have a prominent place in our energy policy.

    2. Darvin Dowdy, Houst says:

      Pres. Bush understands that U.S. grain exports is what keeps our trade deficit from spiraling up. Grain – one of our biggest (if not the biggest) exports. Especially now with the ethanol program in place. You see Mr. Lieberman, the world has pointed its accusing finger at us calling us the biggest polluter. So we finally did something to shut them up. The ethanol program.

      But it had an unexpected consequence, you see, that the world didn't like. It drove up the price of grain products which really helped U.S. farmers and the U.S. economy. As to the cattle ranchers – they should stop whining, buy a tractor and grow their own corn! And did it also occur to them that they might demand a bit more for their product?

      Pres. Bush is "finally" thinking of our nation first in this instance. ('bout time!)

      We need to keep this ethanol program in place, keep the price of grain high [don't budge on the price] and MAKE NO APOLOGIES TO THE WORLD for it.

      We should research & invest in high tech, large capacity, long term storage facilities for surplus grain because there will be folks willing to pay our price eventually. The world is approaching 7 billion and these people have to eat.

      Food for sale by U.S. farmers. This is our economic ace in the hole for the 21st century. Keep in mind that many of us have children that will one day need to make a living, too. Darvin Dowdy

    3. Steve Yoder,Dalhart, says:

      Corn prices have doubled in recent years, but you fail to mention that they were at price levels that were far below the cost of production. Cattle coming out of feedyards today show a nice profit.If you have been told otherwise someone is not telling you the whole truth.

      As for the ethanol mandate, the oil companies would not blend 1 drop if it were left up to them.

      Why are you so in love with OPEC?

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