Post by Glenn on Jul 16, 2012 8:24:34 GMT -6
Last week the EPA met with USDA officials for a regularly scheduled meeting to discuss mutual areas of interest. It is within the EPA's power to waive the mandatory ethanol requirement for 10% of gasoline to be a ethanol blend. EPA in consultation with USDA and the Department of Energy must determine an economic harm if the mandate continues and must hold a 90 day comment period before granting the waiver. Someone must first request the waiver.
The economic harm of continuing the mandate can be justified under a sufficient harm criteria and listing the reasoned support would fill thousands of pages of a report, but foremost is the cost of food to all consumers. Current corn prices will quickly result is large increases to meat prices at the market. Corn and corn byproducts also touch many other food products in the consumers grocery basket.
Secondarily, ethanol does not "price in" to the energy mix under the current price structure. Oil has declined from over $100 to the $80s and while this has happened corn has moved from $5 to close to $8 a bushel. Given a free market, ethanol would not be purchased by refineries at current prices because it would make gasoline more expensive. This might be part of the reason the past few weeks have seen the largest decline in the ethanol grind for many months.
As often is the case, politics frequently gets in the way of reason. Any rational market would drop ethanol. Any logical extension of the mandate would be idiotic. But the ethanol industry has been solidly behind Obama since the last election and he has shown his appreciation. Secretary Vilsack even had the nerve to assert that ethanol production had no impact on corn prices in spite of ethanol plants consuming 40% of the crop. When asked last week about a waiver for the ethanol mandate, Secretary Vilsack said he did not see it in the cards.
It is time to put politics aside and move quickly for a waiver of the mandate. This is not a move to benefit the meat industry but is a rational correction to a failed government program and an effort to deliver open free markets to the country.
The economic harm of continuing the mandate can be justified under a sufficient harm criteria and listing the reasoned support would fill thousands of pages of a report, but foremost is the cost of food to all consumers. Current corn prices will quickly result is large increases to meat prices at the market. Corn and corn byproducts also touch many other food products in the consumers grocery basket.
Secondarily, ethanol does not "price in" to the energy mix under the current price structure. Oil has declined from over $100 to the $80s and while this has happened corn has moved from $5 to close to $8 a bushel. Given a free market, ethanol would not be purchased by refineries at current prices because it would make gasoline more expensive. This might be part of the reason the past few weeks have seen the largest decline in the ethanol grind for many months.
As often is the case, politics frequently gets in the way of reason. Any rational market would drop ethanol. Any logical extension of the mandate would be idiotic. But the ethanol industry has been solidly behind Obama since the last election and he has shown his appreciation. Secretary Vilsack even had the nerve to assert that ethanol production had no impact on corn prices in spite of ethanol plants consuming 40% of the crop. When asked last week about a waiver for the ethanol mandate, Secretary Vilsack said he did not see it in the cards.
It is time to put politics aside and move quickly for a waiver of the mandate. This is not a move to benefit the meat industry but is a rational correction to a failed government program and an effort to deliver open free markets to the country.
