Grain Bins


SDCGA supports EPA decision to protect biofuels

Posted on August 07, 2008

Ethanol supporters championed today’s decision by the U.S. Environmental Protection Agency to uphold the Renewable Fuels Standard by rejecting a waiver request submitted by Texas Gov. Rick Perry.

As a result of EPA Administrator Stephen L. Johnson’s decision to deny the waiver request, the required total volume of renewable fuels, such as ethanol and biodiesel, mandated by law to be blended into the fuel supply will remain at 9 billion gallons in 2008 and 11.1 billion gallons in 2009.

“Simply put, the waiver request had no merit. The EPA’s ruling was fully appropriate and is consistent with what we’ve been saying all along given the evidence for the positive role ethanol is contributing to our economy,” said Bill Chase, president of the South Dakota Corn Growers Association. “It’s true, we are all paying more for food but only a small portion of higher prices is tied to ethanol production. By extending fuel supplies, ethanol actually reduces fuel costs significantly.”

Had the RFS been jeopardized with a waiver, refiners would require between 320,000 and 350,000 barrels, or 13.8 million gallons of gasoline per day to make up for the lost capacity offered with ethanol. According to Merrill Lynch commodity strategist Francisco Blanch, U.S. gas prices would be 15 percent higher without the increasing effect of biofuels, which equates into a savings of 50 cents per gallon at recent gas prices.

“Rolling back the RFS would have been the equivalent of taking a significant portion of motor fuel refinery capacity offline. The SDCGA congratulates the EPA on a decision based on understanding of the impact biofuels have on our nation,” said Chase.

In his statement, Johnson related, "The RFS remains an important tool in our ongoing efforts to reduce America's greenhouse gas emissions and lessen our dependence on foreign oil, in aggressive yet practical ways."

The agency recognized that high commodity prices are having economic impacts, but EPA's extensive analysis of Texas' request found no compelling evidence that the RFS mandate is causing severe economic harm.

This week, three separate analyst reports predicted a corn crop of more than 12 billion bushels and a yield averaging more than 154 bushels per acre. On Aug. 12, the USDA will release a crop production report that will be the first official government projection of production and yield based on actual crop estimates.

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