Oil industry seeks repeal of US ethanol standard


WASHINGTON -- A fight is brewing over a federal law requiring ethanol in gasoline, and the battle intensified Tuesday when the main lobbying group for the oil industry said it will ask Congress to repeal the statute.

The American Petroleum Institute, a well-funded group with considerable influence on Capitol Hill, said there are so many problems with the so-called renewable fuels standard that it is time to focus on getting rid of it - and not just tweaking it.

"Given the accumulating problems we see, we think Congress needs to start over," said API director Robert Greco.

The renewable fuels standard was created by Congress in 2005, and was later expanded in 2007. It requires refiners to blend billions of gallons of ethanol into gasoline, with the goal of using 36 billion gallons by 2022. The requirement is enforced by the Environmental Protection Agency.

API is putting its political heft behind this issue at an interesting time. The summertime drought withered crops and pushed up the price of corn, the main ingredient in ethanol, leading to calls to suspend the renewable fuels standard.

Dozens of House and Senate lawmakers asked the EPA to consider a waiver, following similar requests from poultry farmers and cattle ranchers that use corn for animal feed.

Earlier this month, the EPA formally denied the waiver requests, saying it didn't believe the requirement was causing economic harm.

The ethanol industry, representing producers and agricultural companies, says the oil industry's push to get rid of the renewable fuel standard is a classic case of the "fox guarding the chicken coop."

"Special interests will stop at nothing to discredit the success of renewable fuels created right here at home to ensure their lock on the fuels market goes unchecked," said Tom Buis, chief executive of Growth Energy, a pro-ethanol group.

Dow Jones Newswires

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