May 2, 2008 at 4:19 pm #3651
Texas Asks for 50 Percent Waiver of Ethanol Mandate (Update1)
2008-04-25 16:02 (New York)
By Mario Parker
April 25, 2008 (Bloomberg) — Texas Governor Rick Perry today
asked the U.S. government for permission to use less ethanol
because of grain shortages and rising food costs.
Texas is the second-largest U.S. gasoline market and the
country’s largest beef producer. Only California burns more fuel,
according to the Energy Department.
“We’re seeking a 50 percent waiver from grain-based
ethanol” use, said Allison Castle, the governor’s spokeswoman.
President George W. Bush in December mandated that the U.S.
use 9 billion gallons of renewable fuels, such as ethanol, this
year from 7.5 billion gallons last year.
The price of corn, the primary feedstock for ethanol
produced in the U.S., has soared 60 percent in the past year,
reaching a record $6.23 a bushel on April 17 on the Chicago Board
Ethanol, settling today at $2.511 a gallon in Chicago, have
climbed 6 percent so far this year and are 15 percent higher than
a year ago.
“Ethanol comes from corn, an increase in corn means
increased costs for livestock so he’s responding to that,” said
Wallace Tyner, an agricultural economist at Purdue University in
West Lafayette, Indiana.
“This is a symbol that there’s a bit of a change in the
tide, people are starting to look at all the issues,” Tyner
The U.S. is the world’s biggest ethanol producer, followed
by Brazil. Production of the fuel has almost quadrupled in the
last five years, according to data from the U.S. Energy
There are 147 ethanol distilleries in the U.S. with combined
capacity to produce about 8.5 billion gallons of the fuel
annually, according to the Renewable Fuels Association in
Washington, the industry’s primary trade group.
The Independent Cattlemen’s Association of Texas planned to
ask Perry to address the fuels program because higher corn demand
has boosted cattle feed costs by 30 percent over the past year,
Bill Hyman, the association’s executive director said in a
telephone interview on April 23.
“Twenty percent of our corn crop is being used for ethanol,
so we’re facing increased demand from two sources that we haven’t
had in the past; it is a problem for us,” Hyman said.
“Reducing the use of ethanol, as sought by Governor Perry,
will not appreciably reduce grain prices for livestock producers
and food producers in Texas,” Matt Hartwig, spokesman for the
association, said in an e-mailed comment.
–Editors: Theo Mullen, Bill Banker.
To contact the reporter on this story:
Mario Parker in Chicago at +1-312-443-5927 or
May 2, 2008 at 4:21 pm #6885
This is great time to make a move against the crazy Ethanol Mandate with drastic rise in food prices showing the bad impact for both the oil industry and the agriculture industry. And Texas is the best choice for location – the fact that it is one 3 major consumers of Ethanol but is also one of the major beef producing state whose feed prices are feeling the brunt of corn use impacts.
But we don’t need just a “knock-down – we need a TKO on this”! I think the waiver is bad idea – the timing & condition is right to make a more decisive change on the stupid mandate by Bush administration for higher (20%) use & the premature use of ethanol that was knee jerk response by politicians to a complex problem. What really needs to happen is that any future major use ethanol needs to be tied not to Corn but to the development of commercial cellulose applications.
All the arguments for Ethanol’s use (outside Corn growers lobby that is) rest firmly on the use of waste products / cellulose materials to produce it. It is huge waste of taxpayer money to subsidize a bad application that is not a better environmental solution nor an energy cost solution. And this jump start trying to use corn is causing a disaster (as Environmental sponsored solutions usually do) in not only the Oil industry but the Agricultural industry as well. Feedstock cost & food prices are up over 60% already at just a 10% blend application (that has half the cost born by taxpayers) – there was never a chance for grain or sugar application to take it to the mandated 20% level.
This time it isn’t just a big cost burden that the environmental & political groups “solution= Ethanol” have saddled the US with – it is a ticking time bomb that could starve millions of people to death in undeveloped countries that are completely agricultural based as terrible examples in Africa, India & China are starting to bear witness too.
There is huge difference between applications using foodstock grain based source and a waste product cellulose application & grain applications not only need to be stopped (subsidies too) but rolled back start until switch grass or cornstalks are viable commercial application. And now is the time.
Brazil is often highlighted as the example for Ethanol use with it’s cane sugar application – but like most liberal/environmental favorites it is huge lie. You need to read article on “Dark Side of Ethanol” to see how Brazils Ethanol Boom has belied Lung disease, accidents and deaths (2002-05 312 died on job & 82,995) among its cane workers who only receive $1.35/hour wages. And large areas of Rain Forest have been harvested for planting grain crops that has also been ignored. China also has article “China: Food First, Not Fuel, where the customary greeting “have you eaten yet” has been jokingly resurrected because of years of shortages & food rationing have become critical. China blames the ethanol industry whose explosive growth has gobbled up China’s corn harvest and hikes in grain & pork prices (very dependent corn feedstock) brings back fears of famine like one China experienced late 1950’s in their experiment with communist industrialization that killed 30 million people. China has already stopped approving use of new food-based ethanol projects in 2007 and existing ethanol plants are being urged to switch to new “sources”.
It is time for Common Sense to stop taking the back seat and time for little truth telling (Emperor has no clothes) with both the Government & Environmental groups on this issue. Unless a cellulose solution drives ethanol use – continued or higher usage is wasteful, reckless, and criminal disregard for plight of poor.
Texas is great place to start because of its dual Refinery / Beef industry impacts. Better if you could get Texas, Louisiana & California which produce nearly 50% of total us gasoline & hence consume majority of Ethanol for blending – but California will always be lost cause for common sense. Don’t simple go for Waiver – tie it to Cellulose Ethanol production, now is the time – otherwise future expansions we need to prop up US fuel production will fail because a 20% Ethanol blend destroys economics (along with our economy & food industry). Go talk to your company strategy people and leap on Texas movement modified for cellulose production.
May 22, 2008 at 4:06 pm #6835
<Update on Food industry actions on unnecessary price drivers = Speculation & Ethanol mandates; much more proactive in identifying problem and both action & getting message out to public than has been oil industry floundering. CER>
Commodity Trading Rules May Need Strengthening, Lawmakers Say
2008-05-20 14:12 (New York)
By Alan Bjerga
May 20 (Bloomberg) — The U.S. Commodity Futures Trading
Commission may be failing to adequately police speculative
investing in markets for crops such as corn and wheat as food
prices surge, lawmakers said.
“The people of America are about to pick up pitchforks”
as rising food costs pinch consumer budgets, Democratic Senator
Claire McCaskill of Missouri told CFTC Chief Economist Jeffrey
Harris today at the hearing in Washington.
With higher crop prices accelerating food-price inflation,
Congress needs to look at tighter regulation of commodities
markets, McCaskill said. The hearing by the Senate’s Homeland
Security and Governmental Affairs committee was intended to
review the influence of speculative investors on food prices.
Wheat, corn, soybeans and rice have all reached records on
the Chicago Board of Trade this year. The U.S. Department of
Agriculture said yesterday it expects food prices to rise as
much as 5.5 percent this year, up from an earlier forecast of 5
percent and the fastest increase since 1989.
The commodity rallies have been fueled by a surge in demand
for futures contracts by large institutional funds. Investors
seeking better returns than stocks and bonds or a hedge against
inflation and the slumping dollar have poured money into the
Goldman Sachs Commodity Index Fund, AIG Index Fund and Pimco
CFTC’s Harris cautioned against a hasty reaction to recent
volatility in commodity markets.
“Diminishing the ability of futures markets to serve their
hedging and price-discovery functions would likely have negative
consequences for commerce in commodities and ultimately for the
nation’s economy,” Harris said.
To contact the reporter on this story:
Alan Bjerga in Washington at +1-202-624-1857 or
July 22, 2008 at 2:53 pm #6701
<Update on Texas Gov request waive ETOH blending to help TX Beef industry – Postpones of course, we didnt really expect these Congress do nothing turkeys to acually do thier job on these Crisis elements did you? Being fair – this probably needs be new Presidents decision & also majority Democrats won’t give up “Greenie” application until a revolution actually happens. So…when in doubt vote them out – all of them both sides I’m thinking! – CER>
EPA Postpones Decision on Texas Request to Ease Ethanol in Fuel
(New York) By Jim Efstathiou Jr.
July 22, 2008 (Bloomberg) — The U.S. Environmental Protection
Agency delayed deciding whether to ease rules requiring more
ethanol in automotive fuel while it studies the economic impact
of higher biofuel use.
A ruling on a request by Texas Governor Rick Perry had been
expected Thursday, EPA spokesman Jonathan Shradar said. Perry,
backed by at least 26 senators and 51 representatives, is seeking
to halve a U.S. requirement to produce 9 billion gallons of
ethanol this year.
Using corn-based ethanol as a fuel additive is straining
grain supplies and raising costs for human and animal food, Perry
said. The EPA will rule on the waiver request in early August,
“There’s a lot of analysis that has to go into this initial
waiver request because it sets the tone for any future waiver
requests,” Shradar said in an interview. “The administrator is
confident it can be done in early August.”
August 7, 2008 at 5:57 pm #6666
EPA denies governor’s request to lower ethanol requirement
By BRETT CLANTON Copyright 2008 Houston Chronicle Aug. 7, 2008, 2:43PM
The Environmental Protection Agency today denied Texas Gov. Rick Perry’s request to reduce federal ethanol requirements this year.
The decision dealt a blow to Perry and a broad consortium of industry groups that claim rising U.S. ethanol output is inflating corn prices, hurting livestock and food producers and boosting grocery bills.
But in a noon conference call, EPA Administrator Stephen Johnson said the federal Renewable Fuel Standard that sets the ethanol requirement isn’t causing “severe economic harm,” which would be required to justify a waiver, and is improving national security and benefiting farmers.
In a statement, Perry said he was “greatly disappointed with the EPA’s inability to look past the good intentions of this policy to see the significant harm it is doing to farmers, ranchers and American households.” “For the EPA to assert that this federal mandate is not affecting food prices not only goes against common sense, but every American’s grocery bill,” he said.
The decision was seen as a critical test of the Renewable Fuel Standard, which calls for huge increases in ethanol in coming years and is central to a Bush Administration effort to reduce U.S. dependence on foreign oil. That program has come under fire in recent months as corn prices have hit new peaks and global concerns have grown about the wisdom of using food to make a transportation fuel.
Ethanol, primarily made from corn in the U.S., is blended with gasoline at low levels to extend the nation’s fuel supply and improve air quality. In April, Perry injected himself into the center of the debate by sending a letter to the EPA requesting a waiver to cut this year’s federal ethanol mandate from 9 billion to 4.5 billion gallons.
In the letter, he said ethanol production was putting “artificial upward pressure on corn prices,” hurting the state’s $75 billion livestock industry and increasing food prices for U.S. families. The EPA’s public comment period on Perry’s request, which ended in late June, attracted more than 22,000 letters in support of the proposed waiver, Perry said.
Ranchers, poultry growers, restaurateurs and bakers are among those in the food industry who have backed the waiver. The EPA initially said it would make its ruling on the request by late July but then postponed the decision amid the deluge of input from groups on both sides of the issue.
The Renewable Fuels Association, the leading ethanol trade group in Washington, had vigorously opposed Perry’s waiver request. It argued the request didn’t show sufficient evidence that increased ethanol production was causing severe harm to the U.S. economy.
The group has cited studies by Texas A&M University, Purdue University and other policy and research groups that found record oil prices have had more to do with the rising price of corn and other commodities than ethanol. What’s more, the association claims that cutting the federal ethanol program in half this year would only drive fuel prices higher.
That claim was echoed today by the Consumer Federation of America, a consumer group in Washington, which sent a letter to the EPA opposing Perry’s request.
“Independent studies show that ethanol production is keeping gasoline prices form going much higher than they already are by providing an important global source of incremental non-OPEC fuel, reducing the pressure on U.S. refinery capacity that has been severely strained in recent years, and providing a low cost source of supply that is being blended with gasoline,” said Mark Cooper, the group’s research director.
In a June report, the Energy Department said gasoline prices would increase 25-30 cents per gallon if ethanol were not blended into the fuel supply. Perry’s request sought relief from the ethanol mandate for a year starting Sept. 1, saying the temporary suspension was needed to help cool down corn prices and avert a widening crisis.
“Congress specifically created an emergency waiver provision for situations like these and EPA refuses to implement it,” Perry said. He said the Renewable Fuel Standard has had a negative economic impact of $1.17 billion on Texas since the law was enacted in 2004.
If corn prices average $8 a bushel for the 2008 crop, as some project, the impact would rise to $3.59 billion, he said. Texas cattle feeders haven’t reported profits since June 2007, and small family ranches, which make up two-thirds of Texas cattle producers, face potential bankruptcy, Perry said.
But questions have been raised about Perry’s motivation for requesting the waiver. The Houston Chronicle reported in July that Perry made the ethanol waiver request after a March meeting with poultry producer Lonnie “Bo” Pilgrim. Just days after the meeting, Pilgrim donated $100,000 to the Republican Governors Association, which Perry heads as chairman.
Pilgrim also spent more than $9,000 on airfare in June so Perry could attend a news conference in Washington promoting the waiver and donated $25,000 to Perry’s political committee about a month after the waiver request was made, the Chronicle reported. Pilgrim’s Pride, based in the East Texas city of Pittsburg, is the nation’s largest producer of poultry products.
Ethanol production in 2007 was about 6.5 billion gallons, consuming about a quarter of the nation’s corn crop. Federal law requires that the nation use 9 billion gallons of renewable fuel this year and 11 billion gallons in 2009, most of which is expected to come from corn-based ethanol.
In December, President Bush signed energy legislation that expanded the Renewable Fuel Standard to 36 billion gallons by 2022, yet more than half of that target is supposed to be met with fuels made from non-food sources, including crops like switchgrass and agricultural waste.
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