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Reduced corn production makes increased ethanol content in fuel worrisome

A new report has been published that looks at the tense negotiations between the White House and automakers over CAFE standards that would push fuel efficiency to 54.5 mpg by 2025. According to the report put together by the House Oversight and Government Reform Committee, the Obama administration "openly played automakers off of each other to gain a tactical advantage over the industry." 
 
"The inevitable product of this reckless process was a pair of rulemakings that reflect ideology over science and politics over process. … Americans will be forced to drive expensive, unpopular and unsafe automobiles mandated by the Obama administration," stated the report.
 
However, representative Elijah Cummings (D-Maryland), rejected the report stating, "Any allegations that the White House is seeking to weaken the auto industry are simply ridiculous — this is the White House that saved the auto industry from its near-collapse."


"Japan is angry. Feel like they have been screwed." -- Toyota
 
The report also features notes from auto manufacturers involved in the negotiation process with Washington. The notes show that foreign automakers particularly were unhappy with the process and felt that the rules were jilted in favor of Detroit automakers. Despite misgivings, most foreign automakers agreed to the deal. Handwritten notes in the report from Toyota stated, "Japan is angry. Feel like they have been screwed."
 
Automakers maintain that the new requirements would add about $2,000 to the cost of the average vehicle by 2025 or roughly $3,000 when costs from the 2012 to 2013 fuel efficiency rules are figured in. Automakers felt pressure to agree to the Obama administration's fuel economy standards over fears that California would enact even stiffer efficiency ratings if they turned Washington down.
 
While fuel-efficiency standards are set to increase in the coming years, the White House is working hard to get more ethanol into the nation's fuel supply to help reduce the need for foreign oil. However, the U.S. is currently in the middle of a corn shortage. Ethanol in the U.S. is primarily produced using corn. Corn production in the U.S. has fallen drastically due to drought, and livestock producers fear that increasing the ethanol content in gasoline will result in even less corn being available feed, therefore, raising prices of feed and food supplies.


Severe drought conditions have obliterated this year's corn crop [Image Source: MSNBC]
 
The Detroit News reports that over 180 members of Congress are calling on the Obama administration to waive increased ethanol requirements in fuel. White House spokesman Jay Carney said, "The EPA has made clear that they're working closely with the Department of Agriculture to keep an eye on yields, and they will evaluate all the relevant information when assessing that situation."
 
EPA spokeswoman Alisha Johnson said, "We are in close contact with USDA as they and we keep an eye on crop yield estimates, and we will review any data or information submitted by stakeholders, industry and states relating to the RFS program."

Sources: The Detroit News [1], [2]



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RE: How about...
By TSS on 8/13/2012 2:28:58 PM , Rating: 2
It still makes perfect business sense. I mean if you're in the corn business (i don't mean ye olde small farmer i mean the huge food corperations) on the lobbying side of things, you're having a field day right now. A drought ontop of mandated ethanol? Prices, and profits, will go through the roof!

For Obama it still makes sense, certainly in election time. The drought is sure to raise prices of just about anything completly masking inflation (it wasn't inflation, it was the drought! This can't happen if prices drop), while the continued support for ethanol makes certain Obama has his sponsors. Just look at the price changes in the yen vs dollar over the past 5 years, it dropped from 114 to 78 vs the US dollar. If i trust any economy to stay the same it's the japanese economy since it's been stagnating for 2 decades already (yes, this also means the EU are inflating like hell). In fact that change in the yen *is* the first change in 2 decades.

Actually, the only way in which it does not make sense, is when you keep in mind you're dealing with human beings in the chain who now have to work even harder to afford food and cars, so you're actually directly causing suffering. Cause politicians don't see human beings. They see tax payers.


RE: How about...
By Motoman on 8/13/2012 10:05:12 PM , Rating: 1
Makes perfect business sense?

Sure...in the same way it would make "perfect business sense" for a pharma company to engineer and release a new strain of the flu and then create the only vaccine that can treat it. Rollin' in money then.


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