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Corn country senators push back on ethanol

Senators Tim Johnson (D-SD) and Chuck Grassley (R-IA) on Wednesday stepped up their recent defense of the embattled ethanol industry by urging EPA Administrator Stephen Johnson not to roll back the Renewable Fuel Standard, part of last year's energy bill.

The RFS requires the oil industry to use 9 billion gallons of ethanol this year. Recently Texas Governor Rick Perry asked the EPA for a waiver of the RFS and just last week some two-dozen Republican Senators, including presidential candidate John McCain, asked Johnson to cut the ethanol requirement, citing high food prices.

The South Dakota Senator disagrees, and he told reporters Wednesday that removing ethanol from the gasoline supply would make fuel even more expensive for motorists.

In their letter to EPA Administrator Johnson, Senators Grassley and Johnson said "We're writing to express our strong opposition to any request to partially or completely waive the Renewable Fuels Standard. We strongly disagree with the assumption that the renewable fuels mandate is harming the U.S. economy or that it’s primarily responsible for the global escalation of food costs.

"At a time when a barrel of crude oil costs nearly $120 and gasoline prices are approaching $4 a gallon, the fuel produced by the U.S. ethanol industry is helping to extend our fuel supply and keep prices lower," the senators added. "A Merrill Lynch analyst recently estimated that oil and gas prices would be 15% higher if biofuels weren't added to our nation's fuel supply. According to Iowa State University's Center for Agriculture and Rural Development, ethanol use has lowered gas prices by 30 to 40 cents a gallon, while relaxing the mandate would reduce corn prices by only five percent."

Senator Johnson said he expects just as much support for his letter of support as McCain and Senator Kay Bailey Hutchison of Texas got for their request for a waiver.

"I anticipate a similar number. This is exactly the wrong step to take," Senator Johnson said Wednesday.

Johnson said he doesn't believe the EPA will grant a waiver.

In recent press reports, President Bush has continued to urge support for ethanol, saying he'd rather have American fuel dollars going to farmers than to unfriendly oil exporting countries.

Hutchison, in her letter to EPA, said "We need to assess the corn-based ethanol mandate and its unintended effects on food prices for American consumers."

McCain, a long-time critic of ethanol subsidies, added that "Every time hardworking American families buy groceries, they feel the financial sting of misguided federal policies mandating that taxpayers support ethanol. It isn't a surprise that food prices are rising when more than 25% of the corn grown today is taken out of the food supply and instead used for subsidized ethanol production. This subsidized program -- paid for with taxpayer dollars -- has contributed to pain at the cash register, at the dining room table, and a devastating food crisis throughout the world. We need to put an end to flawed government policies that distort the markets, raise food prices artificially, and pit producers against consumers. We must call on the EPA to exercise its authority to not exacerbate this already bad situation."

The letter is posted on Hutchison's Web site here.

Johnson also gave his support to a Democratic proposal in the Senate to deal with rising gasoline prices. It calls for greater oversight of speculation in petroleum futures by the Commodity Futures Trading Commission and a temporary halt to filling the government's strategic petroleum reserve. The legislation would also put a tax on part of the windfall profits of oil companies if they don't increase production capacity.

The bill doesn't call for a temporary rollback of federal excise taxes on gasoline. Senators John McCain and Hillary Clinton have both proposed different versions of that idea.

Senators Tim Johnson (D-SD) and Chuck Grassley (R-IA) on Wednesday stepped up their recent defense of the embattled ethanol industry by urging EPA Administrator Stephen Johnson not to roll back the Renewable Fuel Standard, part of last year's energy bill.

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