Petition to waive U.S. ethanol mandate could come this week

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At least one of four states hoping to ease requirements on adding grain-based ethanol to gasoline is expected to petition the federal government as soon as Monday, as the worst drought in 50 years threatens higher corn prices and lowers margins for livestock producers.

Governors from states that may petition the Environmental Protection Agency to waive the mandate known as the Renewable Fuel Standard, or RFS, include Republicans Nikki Haley of South Carolina, Dave Heineman of Nebraska, Rick Perry of Texas, and Democrat Mike Beebe of Arkansas, an ethanol industry source said.

Matt DeCample, a spokesman for Beebe, said the governor is "working on getting the word out to the EPA and others" that the mandate is hurting ranchers and poultry farmers with extra costs, but he has not yet signed on to a specific campaign to petition the agency.

The other governors were immediately available for comment.

Meat groups including the National Cattlemen's Beef Association, the National Chicken Council and The National Turkey Federation complain the RFS threatens their profits by boosting prices for livestock feed, one of their top expenses.

The groups have said they want governors from both major political parties to push the EPA for a waiver, to strengthen their case.

"Another short corn crop would be devastating to the animal agriculture industry, food manufacturers, food service providers and consumers," they said.

Two-thirds of the country is suffering from moderate to exceptional drought with 40 percent of U.S. counties listed as agricultural disaster areas, the government has said.

The severity of the food price impact on consumers is unclear. The Department of Agriculture forecast this week food prices would rise as much as 3.5 percent this year and another 3-4 percent next year, outpacing other consumer costs, as the drought destroys crops and hits supplies. Still, analysts do not expect the increase to have a lasting impact on inflation.

The country produced 13.9 billion gallons of ethanol, mostly made from corn, last year. The RFS, which seeks to reduce imports of foreign oil, requires that 15 billion gallons of ethanol be blended into gasoline in 2015, up from 13.2 billion this year. It requires the 15 billion gallon level until 2022. Former President George W. Bush signed the RFS into law in 2007. President Barack Obama has embraced ethanol as part of his "all of the above" energy strategy.

The meat groups, who are holding a press teleconference on Monday about the mandate, support bills on Capitol Hill to do away with the RFS or have it automatically adjusted when corn supplies tighten. The bills face uphill battles as ethanol remains popular for the jobs it brings in many agricultural states.

Petitioning the EPA could also prove hard. In 2008, another drought year, Perry asked the agency to waive half of that year's mandate of 9 billion gallons of ethanol to be mixed into fuel.

The EPA turned the request down saying economic damage would have to be severe. In addition, the EPA signaled future petitions would have to demonstrate that implementation of the mandate itself was causing the economic harm, not just contributing to it.

Earlier this month, Perry's office said he was not considering petitioning the EPA for a waiver, but he would monitor the situation.

An EPA spokeswoman said Friday the agency had not received any waiver petitions. If the EPA does get a request, it could take months for it to decide, as a public comment period and assembling a case for or against any petition take time.

Even if the EPA granted a waiver, it is not certain that would have a big impact on corn prices. Bruce Babcock, an agricultural economist at Iowa State University of Iowa, said removing the mandate may only cut corn prices about 28 cents per bushel, or about 4.6 percent, due to flexibilities in the RFS. Those include the ability for fuel blenders to tap an overhang of ethanol stocks from last year. (Additional reporting by Ayesha Rascoe, Charles Abbott, and Michael Hirtzer in Chicago; Editing by Alden Bentley)

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July, 28, 2012 at 08:31 AM

this mandate is only one of many probles created by the epe. they have too much control over us !

July, 28, 2012 at 10:09 AM

Where's the petition I am ready to sign, if the EPA and the President and senate are to stupid to deal with this, step out of the way and let we the people decide!!! And the people with first hand knowledge of what's going on do what they need to do! The Government is supposed to be there to help not make the decisions on everything!

Winter Haven,Florida  |  July, 28, 2012 at 12:32 PM

I believe the use of blending Ethanol should be discontinued throughout the US now. Do more drilling for oil to add to the gasoline supply but for the future, and start right now get the trucking industry on natural gas as fast as possible. I believe the EPA should either be shut down or put someone in charge who loves this country,has run a business & made a profit,and is not an eco nut.

Atlanta  |  July, 29, 2012 at 11:48 AM

They want us to drive cars that get better gas mileage and then put ethanol in our tanks. Their thinking is so illogical!

Ross Blankert    
David, Rep of Panama, Chiriqui province  |  July, 28, 2012 at 01:26 PM

The government has interferred with the markets and made things much worse. Corn shortages affect the world food market and it is having an adverse affect on the price of fuel now too. The "Green energy provisions" by this administration have the US Navy paying $59 a gallon for jet fuel when it is available from oil at $3.60. You note that by the EPA regulating coal out of business the price for electricity will double and redouble. The taxpayers will be paying for this and even those who pay no taxes. The latest is to raise taxes on those who make some money. They will have to raise the prices on the things they make or sell to make a profit. The average consumer will pay for this too. The government will waste any money they get. If you take money out of the economy by taxation, there will be less investment and less money to hire people. When the taxes go up, the government takes in less money because there are less people working and paying into the tax base.

Bill Hyatt    
Las vegas NV  |  July, 28, 2012 at 06:26 PM

Ethonal is destroying the older vehicles, lawn mowers, chainsaws, boat motors and any other small engines. ethonol eats rubber, is dangorous, expensive and down right stupid. Teh government always thinks they know more than the experts of the subject. Go ask one of the hundreds of PHD petro Engineers what they think of it. I just dumped a nice gas powerd truck and bought Diesel because of it. Forced to replace all my fuel lines every year, on and on. it is crap.

George Fuller    
Sarasota, FL  |  July, 29, 2012 at 02:16 PM

Ethanol was one of many stupid ideas approved in Congress.....prevent the Keystone Pipeline but use a food product to make a fuel additive.........OH.....and slap a 50 cent a gallon tariff on ethanol from Brazil where it is made from sugar cane.....YEP.....those people in Congress can take a bad situation and make it worse....

missouri  |  July, 30, 2012 at 08:09 AM

I for one do not want any changes now, whether I agree with the mandate or not, as i have adjusted and use ethanol byproducts to feed out my cattle and will not be able to adjust quickly enough to the loss of this feed - and corn prices will not come down enough to compensate and may end up[ out of business. We need to stop changing the rules because it becomes inconvenient every few minutes.

Jake Getty    
rio  |  July, 30, 2012 at 09:06 AM

Brasil's corn yields per bushel as increasing by the week.Prices of corn as steadily decreasing in Brasil and now we are seeing an increase in exporting to the US.The corn is top quality and the shipping costs are cheap and will become even cheaper if others in the cattle industry follow suit.The demand destruction on US corn must be taken into account.The price of US corn appears artificially inflated.The Brazilian crop is the highest yield for years and we see and increasing in planting of corn seed.

Dan Martens    
Foley MN  |  July, 30, 2012 at 10:35 AM

This a more complex issue than appears on the surface. Another dimension is that farm families (and others) have invested a significant amount of money in ethanol plants based on this government policy. We all take our licks in the market place when economic conditions change. It's much tougher to deal with when our government plays policy ping pong with personal investments. I sometimes encourage people not to invest more than they can afford to lose when the investment hinges on a government policy position. I traveled in Sao Paulo Brazil several years ago, third largest city in the world at that time, I believe. I have no doubt that their use of ethanol was significant for air quality and manufacturers of combustion engines figured it out accordingly. I think there are exemptions and alternatives here for owners of older vehicles and equipment.

Batavia, NY  |  July, 30, 2012 at 10:50 AM

The ethanol mandate is to add an oxygenate to gasoline to reduce pollution. It replaced the additive called MBTE which was polluting water supplies and also making people ill at gas stations. Do all of you smart people want to return to the use of MBTE? Or do you prefer more pollution? Do you even know what MTBE is? I have been using ethanol in my lawnmower and other small engines and problems have not only been minimal, most almost non-existent. Why does the government keep changing the rules whenever someone cries?

Wisconsin  |  July, 30, 2012 at 12:46 PM

I'm honestly shocked people are actually going to change this. I realize that economically it probably would have more pros than cons to waive the mandate for this year, but a government should be tinkering with laws to prevent economic downturn. Things will work themselves out. Has everyone already forgotten what happens?

Williamsburg, Penna.  |  July, 30, 2012 at 02:52 PM


Bobby Fontaine    
Lorton, Va  |  July, 31, 2012 at 08:59 AM

it does make sense that ending ethanol production will not result in a significant lowering of corn prices because excess corn has already been turned into ethanol, which of course is what the industry is saying, that there should be no need for concern because they have 800 millions gallons of it stored away,, normally that 800 million gallons of ethanol would be our corn stores for when we have a bad drought,, so instead of having a large amount of grain stores after a good year to help get us through hard times, we have a large amount of ethanol instead,, 800 million gallons, that’s a heck of a lot of ethanol, it’s as if they saw this drought coming and thought “hmm, a bad drought might mean starving people around the world and high food prices here at home,, that could spell trouble for the ethanol industry, perhaps we should buy the worlds corn supplies now and turn it into ethanol, then store it, I mean we can always turn corn into ethanol but they can’t turn ethanol back into food ”

dave olson    
harrisonburg, va  |  July, 31, 2012 at 09:02 AM

Everything the Federal government touches turns to fertilizer! End the ethanol mandate and force the companies to perfect the cellulose to ethanol program. ene the mandate!

NC  |  July, 31, 2012 at 11:48 AM

Take the decreased MPG of 3-4% estimated for E10 vs. real non-ethanol gasoline, add the direct and indirect increase in fuel consumption associated with ethanol production (increased amount of fuel needed to farm, transport, process, and construct ethanol facilities), and do you really come out ahead? Exactly, we are just using more fossil fuels while now slowly destroying our gasoline engines that aren't designed for ethanol! The government is so backwards trying to keep itself in business, they create a facade on every issue they can to blindside us with the practical issues they create for the individual, so they can get away with taking what little we have left with their other swooping hand. All, please petition your representatives to protest and detest ethanol-added gasoline.

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