Friday, May 02, 2008

Ethanol faces growing U.S. backlash - Globe and Mail May 2

The United States produces roughly 6.5 billion gallons of ethanol annually, representing less than 5 per cent of gasoline supplies. Under the new standard, biofuels would eventually have to make up more than 25 per cent of the gasoline mix. This year, more than 30 per cent of the U.S. corn crop is expected to go into gasoline, up from 15 per cent in 2005.

The fuel also enjoys hefty tax incentives. Oil refiners also get a 51-cent tax credit for every gallon of ethanol they blend into gasoline. Texas Senator Kay Bailey Hutchison has tabled legislation that would freeze the biofuels requirement at current levels to "relieve pressure on global food prices."

Last week, Texas Governor Rick Perry appealed to Washington to immediately halve the ethanol mandate, calling the requirement "misguided." Others want the U.S. Environmental Protection Agency to waive the ethanol mandate on the grounds that it's harming the economy.

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