Oil industry sues to block corn-based ethanol mandates

Source: By David Shepardson, Detroit News Washington Bureau • Posted: Thursday, November 29, 2012

Washington – The government’s rising requirements for corn-based ethanol for use in the nation’s cars and trucks is adding billions of dollars to the costs of groceries — and even the price of fast-food burgers — as the oil industry sued to block some new mandates.

On Wednesday, the American Petroleum Institute said it filed a lawsuit in the U.S. Court of Appeals for the District of Columbia against the Environmental Protection Agency for its decision to mandate the use of 1.28 billion gallons of biodiesel in 2013, a 28 percent increase from the 2012 requirement.

“EPA’s overzealous 2013 biodiesel mandate is unworkable, could raise the costs of making diesel fuel, and should be reduced,” said Bob Greco, API group downstream director. “In its final rule, EPA admitted the costs of increasing the biodiesel volume requirement for 2013 outweighed the benefits by as much as $425 million.

On Wednesday, the National Council of Chain Restaurants released a new report that said the Renewable Fuel Standard could cost chain restaurants up to $3.2 billion annually, with quick-service restaurants witnessing cost increases upward of $2.5 billion, and full-service restaurants seeing increases upward of $691 million

The rules have “dramatically distorted the market and increased costs throughout the food supply chain,” said NCCR Executive Director Rob Green. “The RFS has had an adverse effect on the chain restaurant industry, which has witnessed marked increases in commodity prices and associated costs to the tune of billions of dollars a year.”

But biofuel advocates had a victory on Wednesday, when the Senate voted 62-37 to continue to allow the Pentagon to buy higher priced biofuels — reversing a vote by the Senate Armed Services Committee this summer.

This month, the Environmental Protection Agency rejected a request from eight governors and nearly 200 members of Congress to waive requirements for the use of corn-based ethanol in gasoline, after last summer’s severe drought wilted much of the nation’s corn crop.

The move is a victory for corn farmers who have seen corn prices jump 400 percent in recent years. But it is a loss for pork and beef producers who say the diversion of corn to ethanol raises feed prices and ultimately prices at the supermarket.

Automakers have clashed with ethanol advocates and opposed boosting the percentage of ethanol. They argue that higher concentrations of ethanol in gasoline — which may be necessary in order to meet stepped-up minimums for annual ethanol usage — can harm engines in most vehicles on the road today.

Congress is likely to take up the issue again next year amid concerns about the growing amount of corn being shifted from the world’s food supply into the nation’s 240 million gas tanks.

The EPA said it had not found evidence to support a finding of severe “economic harm” that would warrant granting a waiver of the Renewable Fuel Standard. The law was signed in 2007 by President George W. Bush and requires production of increasing quantities of ethanol.

“We recognize that this year’s drought has created hardship in some sectors of the economy, particularly for livestock producers,” said Gina McCarthy, assistant administrator for EPA’s Office of Air and Radiation. “But our extensive analysis makes clear that congressional requirements for a waiver have not been met and that waiving the RFS will have little, if any, impact.”

The API and chain restaurants association have called for a repeal of the mandates.

Growth Energy, an ethanol trade association, dismissed the criticisms.

Tom Buis CEO of Growth Energy called API’s criticism “a classic example of the fox guarding the chicken coop.”

He said the RFS is creating jobs in rural America.

“Special interests will stop at nothing to discredit the success of renewable fuels created right here at home to ensure their lock on the fuels market goes unchecked. They continue to protect the status quo, ensuring our addiction to foreign oil and preventing consumers a choice at the pump.”

The EPA conducted several economic analyses and concluded that, on average, waiving the mandate would reduce corn prices 1 percent.

EPA also said waiving the mandate would not affect household energy costs.



From The Detroit News: http://www.detroitnews.com/article/20121129/AUTO01/211290340#ixzz2DbqP0FIo