NCPA - National Center for Policy Analysis


August 13, 2008

At what price will corn be so expensive that the federal government will decide that it is time to stop driving up the price of food, asks Texas Governor Rick Perry?

In 2005, Congress imposed a Renewable Fuel Standard (RFS) mandate requiring the addition of biofuel in gasoline; in 2008, nine billion gallons of ethanol were required to be blended in, and even more will be required in 2009.  As a precautionary measure, Congress gave the Environmental Protection Agency (EPA) the power to waive the new mandates if they turn out to have unforeseen, negative consequences.

And they have, says Perry.  The price of corn has spiraled out of control:

  • In 2004, the cost of corn hovered around $2 per bushel; now it is close to $8.
  • In April 2008, Perry asked the EPA to cut the grain-based ethanol mandate in half for one year.
  • In response, the agency opened a comment period and received more than 15,000 comments, most of which supported the request.
  • But in August 2008, the EPA decided to deny the request.

The EPA claims that the mandates are not causing sufficient damage to warrant action.  However, denying Texas's request "is a mistake that will…force families to bear a heavier financial burden to put food on the table than necessary and harm the livestock industry," says Perry.  Instead, he continues, the United States should follow Texas's lead and begin developing technology that makes use of the available additional sources of renewable energy, such as the development of nonfood bioenergy, which has a minimal impact on food production and the environment.

Further, Perry states that if forcing Texas ranchers to close their doors because they can no longer feed their livestock is not sufficient damage to warrant action, than what is?

Source: Rick Perry, "Texas is Fed Up With Corn Ethanol," Wall Street Journal, August 12, 2008.

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