White House Steps Up Biofuels Support
WASHINGTON, D.C. -- The White House made its first major statement on ethanol on Tuesday, assembling three Cabinet members to outline a plan to shield corn ethanol producers from the credit crisis, work with them to cut their use of natural gas and coal in production, and nudge the auto industry toward production of vehicles that can use ethanol at concentrations of up to 85 percent, The New York Times reported.
The Secretaries of Agriculture and Energy, Tom Vilsack and Stephen Chu, respectively, along with the administrator of the Environmental Protection Agency, Lisa Jackson, announced during a press conference the formation of a "Biofuels Interagency Working Group" comprised of the three agencies, according to the newspaper report.
Through this working group, the federal government announced several goals, including helping to refinance existing ethanol and biodiesel factories whose owners are having trouble obtaining credit, guaranteeing loans for the construction of new biorefineries, and expediting funding to help producers of cellulosic crops. Cellulosic crops refer to non-food crops, or the non-food portion of plants grown for food like corn stalks, that in theory can be converted to fuel on a commercial scale, the report stated.
President Obama put the Agriculture Department in charge of the multi-agency effort.
Weighing the Impact of Ethanol Use
WASHINGTON -- The pros and cons of increased ethanol use are the subjects of debate, according to figures revealed by the nonpartisan Congressional Budget Office (CBO), and recently reported by The Associated Press.
The CBO expects food stamps and child nutrition programs to cost up to $900 million more this year because of increased ethanol use. Higher use of the corn-based fuel additive accounted for about 10 to 15 percent of the rise in food prices between April 2007 and April 2008.
The CBO said other factors, such as skyrocketing energy costs, have had an even greater effect than ethanol on food prices. CBO economists estimate that increased costs for food programs overall due to higher food prices will be about $5.3 billion this budget year.
Ethanol's impact on future food prices is uncertain, the report said, because an increased supply of corn has the potential to eventually lower food prices.
Roughly one-quarter of corn grown in the United States is now used to produce ethanol, and overall consumption of ethanol in the country hit a record high last year, exceeding 9 billion gallons, according to the CBO. It took nearly 3 billion bushels of corn to produce ethanol in the United States last year—an increase of almost a billion bushels over 2007.
The demand for ethanol was one factor that increased corn prices, leading to higher animal feed and ingredient costs for farmers, ranchers and food manufacturers. Some of that cost is eventually passed to consumers, since corn is used in many food products.
Several affected groups have banded together to oppose tax breaks and federal mandates for the fuel. They said the report shows the unintended consequences of ethanol, the AP reported.
"As startling as these figures are, they do not even tell the story of the toll higher food prices have taken on working families, nor the impact higher feed prices have had on farmers in animal agriculture who have seen staggering losses and job cuts and liquidation of livestock herds," the Grocery Manufacturers Association, American Meat Institute, National Turkey Federation and National Council of Chain Restaurants said in a statement.
Supporters of ethanol disagreed, saying the report was good news.
"The report released by the Congressional Budget Office confirms what we've known for some time: The impact of ethanol production on food prices is minimal and that energy was the main driver in the rise of food prices," said Tom Buis, CEO of Growth Energy, an ethanol industry group.
Ethanol producers asked the Environmental Protection Agency last month to increase the amount of ethanol refiners can blend with gasoline from a maximum of 10 percent to 15 percent, which could boost the demand for ethanol by as much as 6 billion gallons a year. They said raising that cap would create thousands of new jobs.
Agriculture Secretary Tom Vilsack has said he believes the administration could move quickly to raise the cap to at least 12 percent or 13 percent, but the EPA has not yet decided.
The report also looked at ethanol's effects on greenhouse gas emissions, concluding that over time ethanol's benefits over gasoline could diminish. The report says the use of ethanol reduced gasoline consumption by about 4 percent last year and reduced the gases blamed for global warming from the burning of gasoline by less than 1 percent. But the clearing of cropland and forests to produce more ethanol could more than offset those reductions, the AP reported.
REGIONAL REPORT: Western U.S. Sees Fuel Blending, Cigarette Tax Hikes and More
By Hank Behar
NEW YORK -- Pity Washington State’s Ways and Means Committee—it has the job of drafting a budget proposal in the face of the state’s slowest growth rate in 30 years, and the budget deficit could reach $9 billion. Draconian cuts in service are therefore expected, in combination with a possible tax increase. Polls have indicated strong opposition to just about every proposed tax, and lawmakers are strategizing coupling the tax proposal with a specific state program may open the way to an acceptable budget.
As a result, Lea Wilson, executive director of the Washington Oil Marketers Association (WOMA), advised her members to expect "some bad news since this will be the most trimmed-back budget proposal in recent history."
But it hasn’t held WOMA back from continuing its fight in the legislature on behalf of its membership. For example, one proposal would require all terminal operators to make a non-blended fuel available for marine and aviation purposes. Some petroleum interests objected on the grounds it would open a loop-hole in state and federal ethanol mandates, which prompted the House Transportation Committee to kill the proposal. It advised WOMA and oil companies to work together and come back next year with a contractual agreement. Shy of that, the House will take up the issue.
On another front, a coalition of marketers, lobbyists and government staff is being assembled in an attempt to kill a bill that would explore export taxes on refined fuel from Washington State.
"This bill would negatively affect our marketers doing business in neighboring states, as well as marketers exporting fuel into those states," said Wilson, who has pledged to participate in the coalition.
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