Lower Ethanol Mandate Would Cost Consumers, Group Says

U.S. motorists will spend $7 billion to $11 billion more on gasoline next year if the government scales back ethanol use requirements, the Renewable Fuels Association said.

“Reducing the amount of renewable fuel required would decrease refiner and blender purchases of ethanol, increase the sales volume of gasoline and increase the price of gasoline,” Geoff Cooper, a vice president of research and analysis for the Washington-based industry group, said today on a conference call with journalists.

The U.S. Environmental Protection Agency, which is scheduled to release a proposal for the 2014 biofuel use this year, would cut the mandate to 15.21 billion gallons from 18.15 billion, according to a draft proposal dated Aug. 26 provided to Bloomberg.

Ethanol producers and corn farmers have fought changes to the requirements, which escalates every year through 2022, saying it could hurt rural income and increase the need for farm subsidies.

A cut in the mandate would also inhibit future investments in plants, Christopher Standlee, an executive vice president of institutional affairs for Abengoa Bioenergy Inc., said on the same call.

The American Petroleum Institute, which supports a repeal of the ethanol mandate, said keeping it in place would hurt consumers and put the nation’s economy at risk.

“This so-called analysis is just another distraction,” Carlton Carroll, an API spokesman in Washington, said in an e-mailed response to questions. “Because of rigid ethanol mandates, consumers are now faced with putting more ethanol in their tanks than their engines were designed to accommodate.”

To contact the reporter on this story: Lucia Kassai in Houston at lkassai@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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