Friday RFS Roundup – 6/27

June 27, 2014

What have we learned this week? Even the government has grave concerns about its own ethanol policy. Yesterday, the Congressional Budget Office released a game-changing report stating that, if the EPA fails to act, the policy could cause gas prices to rise up to 9 percent, and diesel prices to rise up to 14 percent.

More from this week:

International Business Times, EPA Biofuel Policy Could Push Up Gas Prices: Congressional Budget Office: As we anxiously await the 2014 mandate levels, the nonpartisan Congressional Budget Office (CBO) reports that if the EPA doesn’t lower the ethanol mandates to meet market demands, gas and food prices could be on a steady incline until 2017. And, to top it off, using ethanol won’t even curb greenhouse gas emissions. In fact, an Environmental Working Group study found that using ethanol actually increases greenhouse gas emissions. 

In Short: “If the EPA doesn’t revise down its 2014 mandates to reflect the shift in driving habits and fuel demand, costs would rise for petroleum refineries and raise gasoline prices by 13 cents per gallon to 26 cents per gallon and diesel prices by 30 cents per gallon to 51 cents per gallon by 2017, according to the CBO’s report released on Thursday. The higher costs would also encourage fuel suppliers to sell higher ethanol blends like 85-percent ethanol fuel. Since about 40 percent of the U.S. corn supply is used to make ethanol, the extent to which the RFS increases corn ethanol demand will raise corn prices by as much as 6 percent along with the prices of foods made with corn, including meat, poultry, dairy products and anything sweetened with corn-syrup, the report says.”

Journal Star, Farm and Food: Betting Against Climate Change: As a Ceres report points out, water scarcity is reaching critical mass and the kind of industrial corn production that ethanol requires is putting our dwindling supplies at risk when we can least afford it.

In Short: “The Ceres report lays out the size of that threat to the U.S. corn sector. For example, “87 percent of irrigated corn is grown in regions with high or extremely high water stress” and “over half of the country’s irrigated corn production — worth nearly $9 billion annually — depends on groundwater from the over-exploited High Plains aquifer. Additionally, “36 ethanol refineries are located in and source corn (that is) irrigated” with that High Plains aquifer. It’s a big investment at big risk, suggests Ceres, which directs a group of more than 100 institutional investors whose collective assets top $13 trillion.”