US refiners blast, ethanol firms hail Senate bill

22 June 2007 19:49  [Source: ICIS news]

By Joe Kamalick

 

WASHINGTON (ICIS news)--US refiners condemned on Friday the energy bill passed by the Senate, warning it will likely increase fuel costs, but corn-belt ethanol producers hailed the measure for raising the renewable fuels target nearly four-fold.

 

In a 65-27 vote late Thursday night, the Senate approved legislation that raises the minimum fuel efficiency for US-made automobiles, provides criminal penalties for gasoline price gouging and calls for a sharp increase in the amount of biobased ethanol production.

 

The National Petrochemical & Refiners Association (NPRA) condemned the bill, however, warning that if approved by the House and signed by the president, the Senate measure “is fraught with trouble for the American consumer”.

 

Association executive vice president Charles Drevna said price-gouging controls approved by the Senate are “a solution in search of a problem” and amount to federal price controls that ultimately will mean higher fuel costs for Americans.

 

Drevna also criticized the Senate’s decision to raise US biobased ethanol production to 36bn gal/year by 2022 - a target that represents a 380% increase over the earlier 7.5bn gal/year goal Congress set for national ethanol output by 2012.

 

He said mandated use of alternative fuels will have dire consequences for US energy prospects and cited complaints from food producers and livestock breeders whose materials and feed costs have more than doubled since US corn-based ethanol production has ramped up in recent years.

 

However, the Renewable Fuels Association (RFA) had praise for the bill’s sharply higher ethanol production goal, saying the 36bn gal/year target for 2022 will be a catalyst for growth in cellulosic ethanol development.

 

Current US corn-based ethanol production of some 6bn gal/year is not expected to exceed 15bn gal/year.  Breakthroughs in technology and costs will be needed to reach 36bn gal/year with cellulosic ethanol production using wood chips, grasses and other inedible agricultural products.

 

The RFA, which represents ethanol producers, noted that the Senate bill did not contain hoped-for tax breaks, subsidies and other incentives to accelerate cellulosic ethanol development.  The RFA said it will work to have those benefits included in final congressional action on the energy bill.

 

The US House has to complete its energy package, and that measure must then be reconciled with the Senate bill before it goes to the president for his signature.  President George Bush has indicated he would veto an energy package that includes tax increases.

By: Joe Kamalick
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