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EPA Biofuel Mandate Will Likely Drive Up Cost of Goods

The EPA recently rejected the requests of nine Governors who were seeking exemption from the ethanol mandate. States that requested a waiver were Arkansas, Texas, Virginia, Maryland, Delaware, Utah, Wyoming, North Carolina, New Mexico and Georgia.

As the Houston Chronicle reported:

In rejecting the waiver requests, the Environmental Protection Agency effectively disagreed with the states' concerns that the mandate was spiking corn demand and prices following a drought that devastated crops in the Midwest. The EPA concluded the Renewable Fuel Standard would not cause "severe economic harm" to states and regions.

The mandate forces fuel refiners to produce a certain amount of "biofuel" and in this case ethanol. Protocols were set forth in the Energy Independence and Security Act (EISA) of 2007.  Aside from the obvious idiocy of forcing the private sector to produce certain products and in essence purchase specific products, the mandate will undoubtedly drive up the cost of consumable goods.

States who requested exemption from the biofuel mandate are coming out of periods of drought, wildfires and other anomalies that resulted in lower than average corn yieldings. With the mandate upheld, corn will be in short supply and high demand, which of course will drive the price of corn-based goods higher. Food prices for both humans and livestock will increase, likely impacting the food producers as well as the consumers. 

The EPA acknowledged the drought, but refused to provide relief to states that suffered. Their official statement indicates:

The Agency recognizes that this year’s drought has created significant hardships in many sectors of the economy, however, the agency’s extensive analysis makes clear that Congressional requirements for a waiver have not been met and that waiving the RFS would have little, if any, impact on ethanol demand over the time period analyzed.

Once again, the farmer, the family, the consumer, the small business and anyone else who endeavors to purchase corn products, will have to foot the bill left by unnecessary, senseless regulatory overload.