Fuel Stop: Your Weekly Roundup of Ethanol-Related News (Jan. 5-11)

Headlines:

• Citing corn ethanol’s impact on rising food prices and car engines, professors at the University of Wisconsin and the University of Alabama argue for reform of federal requirements to blend ethanol into gasoline.

• A new analysis by economist Thomas Elam shows that a family of four paid $2,000 more for groceries in 2012 than in 2006. The increase is largely due to the skyrocketing price of corn used in animal feed. Elam singles out the Renewable Fuel Standard (RFS), a federal policy that mandates corn ethanol production, as the main driver of higher food costs. He concludes: “Other than major increases in corn production, the only other possibility for food affordability relief is to amend the RFS and lower ethanol production incentives.”

• Laws in the U.S. and Europe that increase corn ethanol production are continuing to harm the world’s poorest countries, The New York Times reports. In Guatemala, eggs have tripled in price, and farmers are planting their crops on highway median strips due to spikes in food prices and severe land shortages – problems created by diverting corn crops for use in vehicle fuel.

• The government forecasts that corn ethanol production will rebound after a drought-stricken 2012 in order to meet the requirements of the Renewable Fuel Standard. Under it, 13.8 billion gallons of conventional biofuel – i.e. corn ethanol – must be blended into the motor fuel supply in 2013. To fulfill the blending mandate, corn ethanol use will increase to just below 11 percent of the gasoline supply by 2014. The only way to accommodate this much ethanol is by allowing higher fuel blends onto the market, a move that will put consumers at risk of damaging their engines and force the U.S. to revamp its entire transportation infrastructure.

• A drought-reduced harvest, coupled with rising demand for livestock feed, has depleted corn stockpiles more than analysts expected, Bloomberg news service reports. As of December 1, inventories were just over 8 billion bushels – 17 percent less than a year earlier – said a Jan. 11 report by the U.S. Department of Agriculture. Tighter supplies may drive up costs for meat companies including Smithfield Foods, the world’s largest pork producer, which employs more than 48,000 people worldwide.

Numbers in the News:

4.5 billion bushels: the amount of this year’s corn crop – about 42 percent – that will go toward making ethanol.