RFS in Jeopardy in Conference

July 31, 2002

The House of Representatives and the Senate have passed a national energy bill that includes a renewable fuels standard (RFS), but the battle is far from won, according to the National Corn Growers Association (NCGA). The bill is in conference and with the continual onslaught against ethanol in the media, there is a chance the RFS may die in conference.

NCGA is urging its members to contact their elected officials and inform them of the importance of ethanol and renewable fuels. "A renewable fuels standard would reduce our dependence on foreign oil, improve our trade deficit, boost farm income, create new opportunities for rural businesses and reduce farm program costs," said NCGA CEO Rick Tolman.

A recent analysis by John Urbanchuk of AUS Consultants shows implementing the RFS would lead to the annual use of 7.6 billion gallons of ethanol by 2016. "That level of ethanol use could reduce crude oil imports by 2.9 billion barrels by 2016, an average of 302 million barrels annually," said Tolman. "That equates to approximately one oil supertanker a day for the next 15 years."

He added, "These reductions in imports would lower America's dependence on imported oil to 65% compared to the 70% projected by the U.S. Department of Energy in 2016."

Other benefits of an RFS include: (1) the decrease in oil imports can reduce the U.S. trade deficit by $63.4 billion; (2) 300,000 new U.S. jobs can be created; (3) U.S. household income can increase by $71 billion; and (4) 2.5 billion bushels of corn will be used for ethanol production by 2016.

Currently U.S. corn production is 9.4 billion bushels of which 650 million bushels are used in ethanol production. Corn prices will increase an average of 28 cents per bushel. Net farm income will increase an average of $6.6 billion annually. That could reduce direct government payments to farmers $7.8 billion through 2016, says NCGA.