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Texas Governor Seeks Ethanol Waiver

posted on April 25, 2008


AUSTIN (AP) -- Gov. Rick Perry on Friday sought a 50 percent waiver from the federal renewable fuels standard for ethanol derived from grain, citing high food costs.

Perry's office on Friday sent a letter to the U.S. Environmental Protection Agency, seeking the waiver for ethanol production from grain.

In a news release, Perry said he sees the mandate as well-intentioned but thinks it's adversely affecting Texans at the grocery store. A waiver is the "best, quickest way" to help reduce food costs.

"We appreciate the good intentions behind the push for renewable fuels," Perry said in the release. "In fact we're diversifying our state's energy portfolio at a rapid rate, but this misguided mandate is significantly affecting Texans' family food bill."

The Renewable Fuels Association, based in Washington, D.C., opposed Perry's request, saying a reduction of ethanol use will not "appreciably" affect grain prices for livestock producers or food processors in Texas.

More than half the gasoline sold in the U.S. is blended with ethanol.

Replacing the 4.5 billion gallons of fuel that would result if Perry's waiver is granted would cost Americans across the country, association president Bob Dinneen said in a release.

"Given that America's gasoline refiners continue to run their refineries at far below capacity and oil prices show no signs of abating, it rapidly becomes clear that removing this volume of ethanol would send gasoline and diesel prices far higher than we are seeing today," he said. "In other words, Gov. Perry's approach is a surefire way to guarantee even higher gasoline prices."

One agriculture group, though, backed Perry's waiver request.

"It has been extremely costly to our industry and we are currently facing a cutback in broilers of 5 percent," said James Grimm, executive vice president of the Texas Poultry Federation. "People need to know how their food prices are being affected."

Officials at the National Sorghum Producers and the Texas Farm Bureau disagreed with Perry and the poultry group. The farm bureau called the governor's request "misguided" and "misleading at best."

Results of a Texas A&M University study released earlier this month indicate a total waiver of the mandate would reduce corn prices by only 30 cents a bushel -- a 5 percent to 8 percent decrease based on current prices, the bureau release states.

Perry, the bureau's release states, needs to look at "skyrocketing" energy costs to see where the true increases in food prices start.

"Consumers are hit with a double whammy," bureau president Kenneth Dierschke said. "Oil at more than $115 per barrel not only drives up fuel prices but prices at the grocery store. Distribution, manufacturing and packaging costs -- escalated by the price of oil -- play a much bigger role in rising food costs than the price of corn."


Tags: biofuels ethanol governors news renewable fuels sorghum Texas