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How to subscribeGovernor Ignores Own Study
Texas governor Rick Perry is asking the federal government to cut “skyrocketing” food prices by waiving half of the renewable fuel standard for ethanol made from grain.
The Renewable Fuels Association criticized the governor’s action, saying that reducing the use of ethanol will not appreciably reduce grain prices for livestock producers and food processors in Texas.
“But eliminating 4.5 billion gallons of fuel from the marketplace as the 50% waiver of the Renewable Fuels Standard sought by Governor Perry would do will increase gasoline and diesel prices even more. While this may benefit Texas oil companies, it will certainly hurt consumers in Texas and the rest of the country.”
RFA says that Governor Perry is ignoring the conclusions of a Texas A&M report he himself requested. According to the findings of that study, “relaxing the RFS does not result in significantly lower corn prices.” The Texas A&M report also stated that, “The underlying force driving changes in the agricultural industry, along with the economy as a whole, is overall higher energy costs, evidenced by $100 per barrel oil.”
Responding to Governor Perry, Renewable Fuels Association President Bob Dinneen issued the following statement:
“Tampering, adjusting or removing the requirements will not have the impact on grain prices that Governor Perry seeks, nor will it bring the food price reductions he claims. The skyrocketing price of oil, surging global demand for grains and meat, poor harvests around the globe, and a weakened US dollar are the real factors determining world grain and food prices. The production and use of ethanol, while increasing demand for corn, is not contributing significantly to food price escalation. It is, however, helping to keep and oil prices lower than they might otherwise be.
“Replacing the 4.5 billion gallons of fuel Governor Perry seeks to remove from the marketplace would come at great expense to Americans from all parts of the country. Given that America’s gasoline refiners continue run their refineries at far below capacity and oil prices show no signs of abating, it rapidly becomes clear that removing this volume of ethanol would send gasoline and diesel prices far higher than we are seeing today. In other words, Governor Perry’s approach is a surefire way to guarantee even higher gasoline prices.
“I strongly encourage Administrator Johnson to recognize that oil dependence and the high prices we see today play a far greater role in the complex issue of food prices than ethanol does and to roundly reject the waiver application by the state of Texas.”