Sun-Sentinel: Nicolás J. Gutiérrez: Ethanol mandates drive up expenses

September 13, 2013

Nicolás J. Gutiérrez, September 13 – Recently, there has been a lot of discussion — at least at the national level — about the federal Renewable Fuel Standard (RFS). Most Floridians are probably not even aware of this mandate, which requires America's fuel suppliers to blend an increasing amount of ethanol into gasoline and diesel. And, most Floridians are probably not aware that this federal requirement will drive up their food and transportation expenses.

To meet RFS mandates, fuel suppliers will soon hit what's called a “blendwall” — the point when biofuels cannot be incorporated into fuels at the levels required by the RFS. Fuel producers may be forced to limit production and purchase renewable fuel credits, disrupting the fuel market.According to a recent study by NERA Economic Consulting, this could lead to a 30 percent increase in the cost of gasoline and more than 300 percent increase to the cost of diesel by 2015.

Increasing ethanol mandates will also impact a wide spectrum of the food industry, including farmers, food processors and food manufacturers. More than 40 percent of the United States' corn crop is now used to produce ethanol. Increasing pressure on corn supplies and the rising cost of corn will hurt farmers who use corn for feed, food producers who rely on corn for their products and consumers. Ultimately, those increased costs make their way into our grocery bills.

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