Saturday, August 25, 2012

U.S. government mandate or no, fuel ethanol is here to stay


For the past five years, the U.S. government has paid fuel companies billions of dollars in subsidies to buy home-grown, corn-based ethanol, making it a viable part of the nation's gasoline supply.
Now you would have to pay them not to buy it.
The worst drought in half a century revived a fierce food versus fuel debate. Livestock and food producers and others are calling on President Barack Obama to abandon -- at least temporarily -- a government mandate that requires converting more than a third of the U.S. corn crop to ethanol. The president has three months to decide.
Experts say that even if he waives the Renewable Fuel Standard (RFS), that will not necessarily free up much corn for food and livestock feed. In fact, unless corn prices rise another $2 or oil prices fall sharply, it may not make a difference at all.
Even without the standard, a third of the U.S. gasoline supply must contain ethanol to meet unrelated clean air rules, mostly in California and on the East Coast. No other available substance can oxygenate gasoline as effectively, helping it burn more cleanly.
More importantly, ethanol is as much as $1 cheaper than other types of octane boosters like reformate, which refiners use to increase the efficiency of their fuel.

Read more: http://www.reuters.com/article/2012/08/24/us-ethanol-mandate-waiver-idUSBRE87N05820120824

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