An Urban's Rural View

The ethanol wars rage on. Banish any thought that the EPA's November 16 decision to deny waiver requests from several states and leave the Renewable Fuels Standard in force (see DTN, http://tiny.cc/…) would resolve the debate over the RFS. Ten days later the American Petroleum Institute filed suit against the EPA's decision to increase the amount of biodiesel that must be blended under the RFS in 2013 (http://tiny.cc/…). The next day the API asked Congress to repeal the RFS.

Unlike the livestock, food and restaurant industries, which fret about the impact of ethanol on corn prices, the API complaint centers around problems the oil industry faces in complying with RFS blending mandates. The flaws in the RFS that API cites include the requirement for blenders to purchase credits for cellulosic ethanol even though it's not available yet in commercial quantities. They also include the fraudulent sales of credits that have victimized some blenders.

API says the oil industry will continue to blend ethanol even if the RFS is repealed. Daryll E. Ray and Harwood E. Schaffer of the University of Tennessee have a good analysis of why this might be true, at least for the 2012-2013 corn-marketing year, at http://tiny.cc/…. The industry, it seems, has made significant investments in their production and distribution systems to accommodate ethanol. Even if blending ethanol suddenly became unprofitable, it would take time to undo these arrangements.

Despite these assurances, it's hard to dispel the nagging suspicion that the oil guys would just as soon go back to motor fuel that's 100% from crude oil. Why give up 10% to ethanol, you have to think they're thinking, when we'll have all that North American shale oil to tap someday?

Meanwhile they aren't giving up their campaign to undo the RFS. Neither, most likely, are the livestock, food and restaurant industries. The ethanol wars rage on.

Urban Lehner

urbanity@hotmail.com

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