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Bush proposes easing ethanol blending requirements

Agriculture.com Staff 04/25/2006 @ 2:33pm

Buried in President Bush's speech on energy prices Tuesday is a proposal to allow gasoline blenders to avoid using ethanol this summer to meet clean air requirements.

Bush made that announcement in Washington at a meeting of the Renewable Fuels Association, a trade group representing the ethanol industry. The reaction was mixed.

"There's been some rumblings. Let's just say that. People were scratching their heads and asking, 'Did the President really say that," Brian Jennings, executive director of the American Coalition for Ethanol, told Agriculture Online.

This spring ethanol is replacing MTBE as an octane booster in metropolitan fuel markets in Texas and the Northeast. Spot shortages have been reported and blamed for driving up fuel costs.

According to a White House transcript, Bush told the audience of ethanol supporters, "Now, as you well know, this year we're going -- undergoing a rapid transition in the primary ingredient in reformulated gas -- from MTBE to ethanol. And I appreciate the role the ethanol producers are playing to meet this challenge. You're playing a vital role.

"Yet state and local officials in some parts of our country worry about supply disruption for the short term. They worry about the sudden change from MTBE to ethanol -- the ethanol producers won't be able to meet the demand. And that's causing the price of gasoline to go up some amount in their jurisdictions.

"And some have contacted us to determine whether or not they can ask the EPA to waive local fuel requirements on a temporary basis. And I think it makes sense that they should be allowed to."

Jennings said later that he things the industry is doing a good job of moving ethanol into new markets and that he doubts a waiver would do much to lower fuel prices for consumers.

"If you say don't use ethanol, you're reducing the fuel supply, which would exacerbate problems at the pump," he told Agriculture Online. "It's a disappointment and I think it would be a step backwards for the policy of this country."

In a statement released earlier this month, Renewable Fuels Association President Bob Dinneen said that Department of Energy estimates placed more than three-fourths of the blame for rising gasoline prices on global oil supplies and "just a few pennies" on any shortages of ethanol.

"Were it not for the tremendous growth of the U.S. ethanol industry and the availability of ethanol, refiners' decisions to eliminate MTBE this spring would send gas prices through the roof," Dinneen said. "Compared to other octane enhancers, ethanol remains the most viable and economic choice."

Other reaction to Bush's announcement was also mixed.

Senator Tim Johnson (D-SD) said Wednesday that it's not true that ethanol is to blame for high fuel prices. Blaming ethanol, he said, "is a smokescreen by big oil to take attention away from their record profits."

But Johnson didn't criticize the President's move to allow temporary waivers from Clean Air Act requirements for fuel. Nor does he think it would hurt the ethanol industry. "The waiver is going to be temporary," he said. "I remain bullish on the ethanol industry."

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