Tuesday, May 13, 2008

ETHANOL FACES NEW SCRUTINY AS COST DRIVER

(AP) -- Just months ago, ethanol was the Holy Grail to energy independence. Democrats and Republicans cheered its benefits as Congress directed a fivefold increase in ethanol use as a motor fuel. President Bush called it key to his strategy to cut gasoline use by 20% by 2010. But now with skyrocketing food costs -- even U.S. senators are complaining about seeing shocking prices at the supermarket -- and hunger spreading across the globe, some lawmakers are wondering if they made a mistake. “Our enthusiasm for corn ethanol deserves a second look. That’s all I’m saying, a second look,” said Rep. Jane Harman, D-Calif., at a House hearing Tuesday where the impact of ethanol on soaring food costs was given a wide airing. Sen. Charles Grassley, R-Iowa, one of the Senate’s two working farmers and a longtime ethanol booster, said he finds it hard to believe that ethanol could be “clobbered the way it’s being clobbered right now” over the issue of food costs. The governor of Texas and 26 senators, including the GOP’s presumptive presidential nominee John McCain, are asking the Environmental Protection Agency to cut this year’s requirement for 9 billion gallons of corn ethanol in half to ease, they say, food costs. Connecticut’s governor recently asked Congress to temporarily waive the requirement. Meanwhile, Sen. John Thune, R-S.D., is gathering senators’ signatures on a letter opposing any EPA action so “this attack on ethanol will be blocked,” said a statement from Thune’s office. The 2007 energy bill contained a requirement for refiners to ramp up ethanol use to 36 billion gallons a year by 2022 from about 7 billion gallons last year. In a massive farm bill not yet signed by President Bush -- for the first time in memory -- lawmakers recently trimmed back the federal tax subsidy for corn ethanol, reducing the tax break from 51 cents to 45 cents a gallon.