Congressman Jim Nussle is proposing federal legislation that would push ethanol production even higher. Nussle, who is also a Republican candidate for governor, says the so-called “renewable fuel standard” that requires the production of a set amount of ethanol will be met, five years early.
“Because of the way the economy is moving, because of the expanded supply that Iowa is providing for the marketplace, we can meet that standard next year and that’s why we need to increase the standard and use renewable fuel to help solve the problem of energy,” Nussle says. Corn-based ethanol is in high demand as a gasoline additive since a petroleum-based additive called M-T-B-E is no longer allowed because of environmental concerns.
Nussle wants a 60 percent increase in ethanol production. “Instead of just the 7.5 billion gallon ethanol standard that we have now…let’s make it 12 billion and let’s meet that standard by 2012,” Nussle says. “We believe this gives us the ability to lessen our reliance on foreign energy.”
But Tennessee Senator Bill Frist, the Republican leader in the U.S. Senate, is sounding an alarm about ethanol. He says depending solely on ethanol to make gasoline burn cleaner is driving up the cost of fuel. Frist says instability in the Middle East, insufficient oil refining capacity and ethanol “mandates” are driving up pump prices.
Frist says ethanol offers “huge advantages” but he says having M-T-B-E removed from the market has created supply problems that must be addressed. “We tried to address the liability problems around M-T-B-E,” Frist says. “We may have to address that again.”
Frist, who was in Iowa today (Monday) to give a health care policy speech, also co-signed a letter asking President Bush to investigate whether the oil companies are engaging in “price gouging.” “People are feeling this pinch of gas prices and it is skyrocketing once again over the last several weeks,” Frist says.”We want to make absolutely sure that price gouging is not going on.” He says if the Department of Justice or the Federal Trade Commission find any evidence the petroleum industry is unfairly profiting, then congress will take action.
Joe Johnson, a spokesman for the Iowa Farm Bureau, says while ethanol prices are high right now, it’s a temporary price spike. Johnson says M-T-B-E was banned because it was contaminating groundwater supplies and ethanol is the “appropriate replacement” for it.