Monday, September 17, 2012

"Renewable Fuel Standard, Ethanol Use and Corn Prices" Heritage Foundation

"Ethanol production in the U.S. consumes a significant quantity of corn and has a large impact on corn prices. We believe that ethanol production increases the world corn price by up to 68 percent. Since some corn would likely go to ethanol production with or without a federal mandate, the mandate’s price impact is likely less than 68 percent. One estimate puts the price impact as low as 8 percent.
However, the direction of the impact is clear: The ethanol mandate increases corn prices and the prices of food and products that use corn as an input. Since the impact of the mandate is bad in any case, it is not redeemed by arguing that the bad impact might be a small bad impact.
Waiving the mandate is a good idea. Eliminating it is a better one."

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