Twenty Five U.S. Senators Ask EPA to Adjust Ethanol Mandate

Twenty-five U.S. senators including Dianne Feinstein asked the Environmental Protection Agency to adjust the country’s ethanol mandate, adding to calls for the Obama Administration to take action.

In a letter today, the bipartisan group of senators urged EPA Administrator Lisa Jackson to use her waiver authority because of the record corn prices caused by the most severe U.S. drought in 56 years. Ethanol will be produced from 38 percent of this upcoming year’s crop, down from 41 percent last year, according to government estimates.

Today’s letter follows an Aug. 1 petition from a coalition of 156 representatives in the House of Representatives that asked Jackson to lower or suspend the U.S. requirement, known as the Renewable Fuels Standard or RFS, to use 13.2 billion gallons of ethanol in gasoline this year and 13.8 billion in 2013 because of the effect the drought will have on corn yields and food prices.

“We ask you to adjust the corn grain ethanol mandate of the RFS to reflect this natural disaster and those new market conditions,” the senators wrote in today’s letter. “Doing so will help to ease supply concerns and provide relief from high corn prices.”

Corn for December delivery fell 4.5 cents, or 0.6 percent, to $8.005 a bushel in Chicago. Futures rose to a record $8.205 on July 31.

Ethanol Falls

Denatured ethanol for September delivery fell 0.6 cent to $2.572 a gallon on the Chicago Board of Trade. Prices have gained 17 percent this year.

A telephone message left for Matt Hartwig, spokesman for the Renewable Fuels Association, a Washington-based ethanol trade group, after normal business hours wasn’t immediately returned.

“Calls to waive any or all of the RFS from the livestock lobby, oil industry or their allies in Congress are not only premature, but void of justification,” Renewable Fuels Association President and Chief Executive Officer Bob Dinneen said in an Aug. 2 statement in response to last week’s letter.

Ethanol producers have responded to the record corn prices by slashing output 16 percent to 809,000 barrels a day in the week ended July 27 from a record 963,000 on Dec. 30, according to Energy Department data.

In 2008, Texas Governor Rick Perry submitted a waiver request to the EPA on the mandate that was rejected. That year Arizona Senator John McCain, then the Republican candidate for president, and other lawmakers asked the agency to adjust the requirement because of higher corn prices.

Poet LLC, in Sioux Falls, South Dakota, is the largest U.S. ethanol producer, followed by Archer Daniels Midland Co. in Decatur, Illinois.

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