The Daily Journal: Restaurants: Ethanol Rules Will Raise Meal Prices

December 3, 2012

Diners may have to pay more for their favorite chain restaurant meal in the coming years because of billions of dollars in extra costs generated by a federal mandate requiring ethanol to be be blended into the country’s gasoline supply, according to a new study.

The National Council of Chain Restaurants, a restaurant trade group, asked PricewaterhouseCoopers to conduct the study, which was released this week.

The study estimates the average chain location could see its costs increase by $18,000 a year starting in 2015 when a biofuels mandate known as the Renewable Fuel Standard increases to 15 billion gallons. Overall, the mandate could cost chain restaurants up to $3.2 billion annually, according to the trade group, which represents such major chains as Outback, McDonald’s and Wendy’s,

The Renewable Fuel Standard, a 7-year-old law that requires 13.2 billion gallons of corn-based ethanol to be blended into the vehicle fuel supply this year, has been widely criticized by livestock, state governors and other groups. They argue consumers end up paying more at the grocery store because corn is being siphoned off to produce ethanol instead of being used for food or livestock feed. Ethanol is expected to use 4.5 billion bushels of corn, or about 40 percent of the country’s corn production this year.