US ethanol group blasts Texas waiver request

17 June 2008 21:06  [Source: ICIS news]

NASHVILLE, Tennessee (ICIS news)--The US ethanol industry on Tuesday blasted Texas Governor Rick Perry for trying to reduce the amount of ethanol that will be blended in US gasoline in 2008.

Perry is seeking a 50% waiver on the implementation of the Renewable Fuels Standard (RFS), which mandates that 9bn gal of renewable fuels be blended in US motor fuel this year.

The request came amid growing speculation that US ethanol production is behind a sustained surge in grain/food prices, as the biofuel uses corn as its feedstock.

Perry filed for the waiver in a bid to ease pressure on grain prices, but the Renewable Fuels Association (RFA), which represents the US ethanol industry, said the reduction would only hurt consumers by pushing gasoline prices even higher.

“Gasoline prices will likely increase by 30% if 4.5bn gal of ethanol were to be eliminated from the market place,” said RFA president Bob Dinneen during an industry event in Nashville.

While the elimination of ethanol could benefit Texas oil companies, it would hurt consumers in Texas and the rest of the country, the RFA said in a statement.

Dinneen said Perry was ignoring the findings of a study he had himself commissioned at the Texas A&M University.

“The study found that relaxing the RFS would not result in significantly lower corn prices,” Dinneen said.

The RFA also claims that the A&M report stated that “the underlying force driving changes in the agricultural industry, along with the economy as a whole, is overall higher energy costs, evidenced by $100/bbl”.

The governor seems to have decided not to take that into account, Dinneen said during a presentation at the 2008 Fuel Ethanol Workshop & Expo.

For more on ethanol visit ICIS chemical intelligence
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By: William Lemos
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