Ethanol Is Center Stage In Fight Over American Fuel Tanks

Two large industries — agriculture and oil — are fighting a pitched battle over access to your car's fuel tank. Americans are buying less gasoline, but a federal law requires the country to include an increasing amount of corn-based ethanol in the country's fuel supply. Facing billions of dollars in lost sales, the oil industry wants the government to reverse course on ethanol.

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You can expect to hear more about ethanol in the coming weeks. That's because two big industries, oil and agriculture, are waging a policy war over access to your car's gas tank. Federal law says billions of gallons of ethanol, mostly from corn, must be blended into the country's gasoline. But these days, Americans are using less gas and that means lower profits for oil companies, unless they can convince Congress and the Obama administration to reverse course on ethanol.

NPR's Jeff Brady reports.

JEFF BRADY, BYLINE: Americans last year bought almost nine billion fewer gallons of gasoline than they did just five years earlier. More efficient cars get part of the credit. In 2007, Congress boosted something called the Renewable Fuel Standard, or RFS. It requires a set number of gallons of ethanol be mixed with gasoline, and it increases every year, even if demand for gas declines. These two factors have left the oil industry with a smaller share of what goes in your gas tank.

The industry wants the federal government to lower next year's ethanol mandate. And Bob Greco, with the American Petroleum Institute, says his industry wants more than just an annual waiver.

BOB GRECO: We can't run our industry, our refineries, on a year-to-year basis so we will need long-term certainty about this. So that's why we are urging Congress to revisit this and fix the RFS once and for all. Preferably repeal it.

BRADY: The oil industry argues most cars on the road today could be harmed by gas containing more than 10 percent ethanol; something ethanol backers dispute. There also are questions about ethanol's environmental benefits. While burning it emits fewer greenhouse gases than petroleum, growing all that corn requires intensive agricultural practices. The ethanol industry dismisses each of these criticisms as big oil trying to protect its business.

Bob Dinneen heads the Renewable Fuels Association.

BOB DINNEEN: If it's not ethanol, what's it going to be? Well, it's going to be more oil. Where are we getting our oil from increasingly today? From fracking in North Dakota, from tar sands in Canada, raping the pristine forests of that beautiful country.

BRADY: Dinneen's industry argues their fuel also boosted the economy in rural America.

Economist Philip Verleger says ethanol also saves money at the pump.

PHILIP VERLEGER: The renewable fuels program has probably reduced prices this year of crude oil by between, oh, 15 and maybe as much as $25 or $30 a barrel.

BRADY: Verleger says trouble in the Middle East has tightened world crude supplies. He argues oil prices would be higher if there were less ethanol available. He says if you want a shorthand way to understand the current debate over the Renewable Fuel Standard, here it is.

VERLEGER: You got two big industries duking it out over a shrinking gasoline tank.

BRADY: Who will win, oil or agriculture? We should know soon.

Jeff Brady, NPR News.

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