Iowa Public Television


President Bush Calls for Increased Ethanol Imports

posted on May 12, 2006

Hello, I'm Mark Pearson. U.S. consumers opened their wallets last month, but not as eagerly as some analysts had predicted. **According to the Commerce Department, retail sales increased half-of-one-percent in April ... a solid gain, but below the expectations of some on Wall Street. **Nearly everyone predicted the Federal Reserve would raise interest rates this week, for the 16th consecutive time over the past two years. And that's exactly what happened. The Fed's move pushed the prime lending rate to a five-year high of eight percent. **And the government reports the U.S. trade deficit narrowed to $62 billion in March. That's the smallest deficit in the past six months and the first back-to-back monthly declines in more than two years. The improvement reflected an eight percent decline in crude oil imports. But retail gasoline prices have risen nearly 50 cents since March. And tight supplies this week prompted the White House to call for increased imports of ethanol... a move that drew fire from farm state lawmakers.

President Bush Calls for Increased Ethanol Imports

With gas prices in the U.S. hovering near or above the $3 mark, everyone is looking for ways to ease consumer concerns. President Bush this week said he favors temporarily lifting the 54-cent-a-gallon tariff on ethanol imports as a solution. According to U.S. International Trade Commission statistics, the nation imported about 160 million gallons of fuel ethanol last year. Some lawmakers in Congress have offered bills that would remove the tariff because of tight domestic supplies. There have been reports of refiners in California and Texas running out of the fuel additive.

House Majority Leader John Boehner (Bay-ner) said Tuesday it's possible the House will back the President's proposal. The Ohio Republican claims imported ethanol could help establish a U.S. market for the fuel additive, helping build demand while U.S. manufacturers build new ethanol refineries.

Meanwhile, farm state lawmakers say ending an ethanol tariff would hurt U.S. agriculture. Senator Charles Grassley claims ending the import tax on the fuel additive only will help major oil companies. In a recent statement, the Iowa Republican said, "Everyone's looking for a way to lower gas prices, but lifting the ethanol tariff won't mean lower prices for consumers. What's more, it would undermine efforts to make our country more energy independent and reward the oil companies that already are raking in record prices."

Grassley, who is a farmer himself, added the only other major ethanol producer is Brazil, where supplies already are tight. According to energy officials, the country's export volume is expected to remain flat despite large local and international demand.

For his part, Senator Tom Harkin announced on Thursday a renewable fuels program that would increase the nation's use of ethanol to 60 billion gallons a year by 2030. Use of the fuel additive is currently 4.5 billion gallons annually. The Iowa Democrat said, "We must do much more to increase our use of homegrown ethanol and biodiesel. This proposal lays the roadmap to a long-term ramp-up in domestically produced renewable fuels."

Oil companies continue to blame recent increases in gasoline prices on refiners shifting from MTBE as a gas additive to ethanol. The domestic ethanol industry disagrees, saying there will be plenty of product available. The Renewable Fuels Association claims that removing the tariff on imported ethanol isn't the answer to the country's current high gas prices. Some energy experts go as far as saying the ethanol concerns are temporary and that the problems have less to do with shortage of the additive than other factors.


Tags: biofuels ethanol George W. Bush industry news presidents renewable fuels