The U.S. government is reviewing the country's ethanol policy in the wake of numerous calls for a suspension of the existing mandate due to the continued drought, which has lowered predicted corn yields and raised prices.
Ethanol production was 817,000 barrels a day the week of Aug. 5, down 15 percent from a record in December 2011. Stockpiles dropped 3.9 percent to 18.7 million barrels, the lowest level since Dec. 30, 2011, according to Energy Department data. “I would simply say that the [Environmental Protection Agency], in consultation with the Department of Agriculture, is looking at this,” said Jay Carney, the White House press secretary. “I don’t have a statement one way or the other predicting what the experts are going to say.”
Ethanol producers have said they're being unfairly blamed for supply pressures, and that roughly one-third of the corn processed to make ethanol is then converted into dried distillers grain, a form of animal feed. In addition, detractors say that a prolonged interruption in ethanol production could produce a spike in the price of gasoline. “You can’t suddenly go to a business that’s manufacturing 9 million barrels a day of gasoline and say ‘Were going to get rid of ethanol,’” said Tom Kloza, publisher of the Oil Price Information Service. “You’d have chaos.”