Ethanol producers slam Bush plan to lift tariff

04 May 2006 23:25  [Source: ICIS news]

WASHINGTON (ICIS news)--US ethanol producers urged federal policymakers on Thursday to maintain the 54 cents/gallon tariff on imported ethanol, saying domestic ethanol output is enough to meet US demand.

 

In a meeting earlier this week with members of Congress, President George W Bush raised the possibility of a temporary suspension of the ethanol import tariff as the White House and Congress explored ways of bringing down the high cost of gasoline.

 

US gasoline prices nationwide average near or at $3/gallon, up by nearly 50 cents/gallon in recent months and well ahead of year-ago prices. The price increase is attributed to heavy demand amid limited domestic refining capacity, the high cost of crude oil and complications in the switch from methyl tertiary butyl ether (MTBE) to ethanol as an oxygenate for gasoline blends.

 

Last month, the Department of Energy said some East Coast states were experiencing shortages at retail gasoline stations because of logistical problems in getting sufficient ethanol supplies to the region.

 

Bush suggested to lawmakers that the US could lift the tariff on foreign ethanol to help ease the short-term logistical problem.

 

The Renewable Fuels Association did not directly challenge Bush in its statement on Thursday, but the group argued that domestic ethanol output is sufficient to meet gasoline blending demands.  The association, which represents US ethanol producers, also argued that ethanol supplies are tight in Brazil, the principal foreign source for US ethanol imports, and might not be available in significant volumes with or without the tariff.

 

The association also argued that eliminating the tariff would constitute a federal subsidy to Brazilian ethanol producers at US taxpayers’ expense.

By: Joe Kamalick
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