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Renewable Fuels Standard repeal unlikely: Congressman
Story Date: 10/12/2012
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Source: Rita Jane Gabbett, MEATINGPLACE, 10/11/12
While two bills in Congress call for some reform of the Renewable Fuels Standard that mandates ethanol production rates, mostly from corn, it is unlikely the standard will be repealed, Rep. John Kingston (R-Ga.) told members of the National Chicken Conference at their annual conference here.
While the Environmental Protection Agency launched the 30-day comment period on Aug. 20 in response to petitions calling for RFS reform, he noted there would be no EPA decision until the week after the election in November.
Of the two bills currently in Congress, one calls for a waiver of the RFS when crops are short and corn supplies are tight, while the other calls for the standard to be repealed.
Kingston predicted while there may be some pushback on the standard, he does not think Congress would be able to get the RFS repealed. “The (pro-ethanol) lobby in Washington is very strong,” he said.
The RFS was top of mind for NCC members at this week’s conference. While corn prices have come off their highs over the past month, corn is still over $7 a bushel and is a critical chicken feed component. Members also noted that prices for other feed components, such as distiller's dried grains with solubles (DDGS) have also escalated along with corn. Soybean meal is still trading over $450 per ton.
The NCC held its board meeting yesterday. Industry leaders told Meatingplace lobbying against current ethanol policy and for an RFS waiver remains a top priority.
In comments submitted to EPA, NCC estimated a full waiver of the 2013 Renewable Fuels Standard requirement would reduce the price of corn by more than $2.00 per bushel, saving the broiler industry $2.5 billion annually.
Purdue University Economist Wallace Tyner, however, warned that many variables could temper the effect of an RFS waiver, including the fact that it still makes economic sense for oil companies to blend ethanol to raise octane content, rather than produce higher octane content gas themselves.
“If conditions of today continued, the (gas) industry would have incentive to keep using ethanol, regardless of the Renewable Fuels Standard,” he said.
Tyner cited various studies predicting at least a nominal decrease in corn prices if the RFS was waived temporarily because of drought-reduced production. He questioned, however, whether gas companies would choose to make a temporary switch to producing 87 percent octane gas instead of the current 84 percent that is now blended up to 87 per cent with ethanol, knowing they would be able to switch back the next year if crop production improved.
For more stories, go to http://www.meatingplace.com/.
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