Cong. Robert Goodlatte (R.-Va) is pushing two bills that would either eliminate the Environmental Protection Agency’s biofuel mandate or tie levels to the level of grain stocks.
Goodlatte introduced the bills last year, and is renewing efforts to get one or the other passed this year in light of the drought that is sucking the life out of the nation’s corn crop. Some 40% of last year’s corn crop went into ethanol production, but this year’s drought suggests intense rationing among food, feed, fuel and export demand. “The drought will only tighten supplies,” says Goodlatte.
His first bill, with 14 sponsors signing, H.R. 3098 would simply eliminate the Renewable Fuels Standards from the Clean Air Act.
The second bill, the Renewable Fuels Standard Flexibility Act ( H.R. 3097) with 30 sponsors signing, would ratchet back the mandate based on the stocks-to-use ratio of corn. If the stocks-to-use ratio is 10.0 or higher, no reduction would be required. If it is 7.5 to 10.0, the mandate would be reduced 10%. If it’s 6 to 7.49, the mandate would be reduced 15%. If it’s 5.0 to 5.99, the mandate would be reduced 25%, and if it’s less than 5.0, it would be reduced 50%.
“In most years, EPA would not need to make an RFS adjustment,” says Tom Elam, and agricultural economist and president of FarmEcon, LLC. “In 2012, it would require an adjustment of 15%.”
In a press conference this morning hosted by Goodlatte, Elam claimed ethanol is one of the prime drivers of rising food prices. He notes that since the Renewable Food Standards have been in place, food inflation has been nearly double that of the overall inflation rate. From January 2008 through December 2011, the average rate of inflation including energy was 1.5%. Food prices increased 2.8% per year during that period with cereal and bakery products rising 4.2% per year and meat, poultry, fish and eggs going up 3.7% per year.
Elam also claims that U.S. gas exports increased since the mandates have been in place, due to increased production, increase gas mileage efficiency and reduced use. “We would not have to import another barrel of oil without ethanol; we would still be exporting,” he maintains.
Elam’s presentation can be found here.