Texas Seeks Ethanol Exemption

Governor is asking for reduction of ethanol requirement.

Published on: Apr 28, 2008

On Friday Texas Governor Rick Perry submitted a request to the Environmental Protection Agency for a waiver of the Renewable Fuels Standard. He wants an exemption from the clean air standards that requires blending of ethanol with gasoline to reduce the amount of ethanol by 50%.

"It is unfortunate that the Governor sees fit to stymie a growing renewable fuels industry by requesting such a waiver which is based more on emotion than fact," says Dale Murden, President of the National Sorghum Producers.

In the past week there has been an increase in the news about high food prices, with many blaming ethanol. A study released last week by the Texas A&M University Ag and Food Policy Center indicates that the effects of a RFS waiver on the price of food and feed would be minimal in comparison to other market factors especially the price of oil.

"I really don't think that they are going to get the exemption they've requested, but it would have significant implications if they would," says Arlan Suderman, Farm Progress market analyst. He says it would adversely impact the ethanol industry and be bearish for the corn market, not to mention that many other states would probably request a similar waiver.

"And ironically it would probably increase the cost of gas because ethanol is stretching the gasoline supply now," Suderman says. "If we removed half of the ethanol, it would require more gasoline to fill the void and actually push prices even higher even though we are already at record gasoline prices."

In a related issue, several Missouri state lawmakers are trying to repeal the law mandating all gasoline contain 10% ethanol. Missouri Governor Matt Blunt says he will not sign such legislation while he remains governor.

The state's ethanol mandate has support from this fall's likely Democratic nominee for governor Attorney General Jay Nixon, as well as the two main candidates for the Republican nomination, Congressman Kenny Hulshof and State Treasurer Sarah Steelman.

Missouri is one of only three states with an ethanol mandate.