Congressional Black Caucus
Reuters/Enrique De La Osa
The Congressional Black Caucus is publicly urging the White House to roll back the linchpin of a decades-old policy mandating the use of corn ethanol in gasoline, citing concerns that the policy is dramatically boosting food costs.
The move increases growing bipartisan pressure to reverse partially a policy that once enjoyed support from environmentalists, farmers and national security groups.
The caucus's appeal, made in a letter last Friday to Gina McCarthy, administrator of the Environmental Protection Agency (EPA), voices support for the EPA's November proposal to cut -- for the first time -- the amount of ethanol that must be blended into the nation's gasoline supply, currently at a 10 percent level.
When the Renewable Fuels Standard (RFS) was established, it was assumed that Americans' gasoline consumption would continue increasing so that mandating more and more ethanol use by gasoline refiners would never push the level of ethanol in gasoline beyond 10 percent, the highest level most car and truck engines can safely tolerate. But Americans are using less and less gasoline and without cutting the amount of ethanol that refiners must buy and blend, then the nation's gasoline supply will contain more than the 10 percent limit, also known as a "blendwall."
"We write to express our concerns with some of the unintended consequences associated with the Renewable Fuel Standard (RFS) and the damage it may have on the U.S. economy, if left unchanged. Accordingly, we support your recent efforts to avoid the blendwall by reducing the amount of ethanol to below 10 percent," the letter states.
The caucus said that the RFS has already done significant damage to household budgets.
"The strong demand for ethanol has resulted in higher prices for corn and higher prices for feed and food, which was especially severe during last year's drought. As a result, last year, the average U.S. family of four faced a $2,000 increase in food costs due to higher corn prices," the letter stated.
On Thursday a group of Democratic and Republican senators, including Sen. Ben Cardin (D-Md.) and Sen. Rusan Collins (R-Maine), became the latest supporters of the EPA's proposal. Further, the recently passed farm bill contains a provision for removing subsidies for rural communities to buy ethanol blending pumps.
The idea for such a policy like the RFS had its inception in the Arab oil embargo of 1973, which demonstrated how dependent the U.S. was on foreign oil. The notion of using corn to make ethanol held out the promise of not just reducing U.S. dependence on foreign oil but boosting support for farmers and reducing greenhouse gas emissions. However, the ability of oil companies to commercially produce vast amounts of oil domestically by using hydraulic fracturing and horizontal drilling is expected to shortly enable the nation to begin exporting rather than importing fuel. Further, the environmental benefits of burning ethanol gasoline are today widely disputed.
"By lowering the mandate down to below 10% in your final rule, the EPA will align the percentage with gasoline market conditions and reflect the concerns of the American people," the letter stated.
Mike Obel assigns, edits and writes stories about business, markets, finance and economics. Before coming to International Business Times, he worked on the Finance Desk of...