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Ethanol Boondoogle Rolls on in the U.S. Senate

Corn-fed Gasoline Means Millions for Mid-West

May 27, 2005
A U.S. Senate committee has approved a requirement that refiners use more corn-based ethanol and other renewable fuels in gasoline. The measure could double ethanol production over the next seven years.

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The Renewable Fuels Standard amendment would raise the demand for ethanol from 4 billion to 8 billion gallons per year by requiring that gasoline contain higher quantities of the corn-derived fuel.

Demand for bio-diesel, which is made from soybeans, also would increase. The Senate energy committee added the provision to the massive energy bill, which still needs full Senate approval.

A House-passed energy bill would limit the requirement to 5 billion gallons. Supporters of the higher number argued that use of ethanol as a 10 percent blend in gasoline would replace 5% of the gasoline by volume beginning in 2012 and reduce U.S. need for oil imports.

Sen. Pete Domenici, (R-N.M.), who is chairman of the Energy and Natural Resources Committee, said there is no doubt an ethanol mandate will be a key to getting energy legislation through the Senate. The full Senate is expected to take up the measure in late June.

But the oil industry said expanding the mandate from 5 billion to 8 billion gallons would require ethanol use in regions where it is not economical and increase fuel costs while providing "negligible reductions in oil imports." The ethanol industry countered, arguing that 8 billions gallons of ethanol would replace 2 billion barrels of crude oil and trigger $6 billion in new investment in ethanol production.

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