US government reviewing ethanol policy in wake of calls for changes

Ethanol production already down, some industries calling for suspension of mandate

The U.S. government is reviewing the country’s ethanol policy in the wake of numerous calls for a suspension of the existing mandate due to the continued drought, which has lowered predicted corn yields and raised prices.

Ethanol production was 817,000 barrels a day the week of Aug. 5, down 15 percent from a record in December 2011. Stockpiles dropped 3.9 percent to 18.7 million barrels, the lowest level since Dec. 30, 2011, according to Energy Department data. “I would simply say that the [Environmental Protection Agency], in consultation with the Department of Agriculture, is looking at this,” said Jay Carney, the White House press secretary. “I don’t have a statement one way or the other predicting what the experts are going to say.”

Ethanol producers have said they’re being unfairly blamed for supply pressures, and that roughly one-third of the corn processed to make ethanol is then converted into dried distillers grain, a form of animal feed. In addition, detractors say that a prolonged interruption in ethanol production could produce a spike in the price of gasoline. “You can’t suddenly go to a business that’s manufacturing 9 million barrels a day of gasoline and say ‘Were going to get rid of ethanol,’” said Tom Kloza, publisher of the Oil Price Information Service. “You’d have chaos.”