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Senate Committee Increases Ethanol Mandate

WASHINGTON -- A Senate panel, responding to high gasoline prices and pressure from farm states, voted unanimously Wednesday to require refiners and importers to more than double the use of ethanol and other agriculture-derived fuels by 2012.

According to the Washington Post News Service, the bipartisan support for an ambitious renewable-fuels "mandate" of 8 billion gallons per year came as the Energy and Natural Resources Committee continued work on an energy bill that still faces many obstacles. Once the requirement is fully implemented, corn-based ethanol and other renewables -- made from sugar cane, soybeans, beets, cornstalks and grasses -- would account for about 5 percent of the U.S. gasoline market, said Sen. Jim Talent, R-Mo., author of the plan.

"This is about fuel in our farm fields and not under sands in Saudi Arabia," said Sen. Byron Dorgan, D-N.D.

The committee debate made clear that the steep rise in gas prices, the war in Iraq and environmental worries have broadened ethanol's appeal and provided an opening for farm-state lawmakers to press the issue. A 2003 House-Senate energy compromise, which was never enacted, called for an ethanol standard of 5 billion gallons a year, only slightly more than the 3.4 billion gallons that is currently being produced.

Talent said a gallon of ethanol costs 20 cents less than its gasoline equivalent today. Under his plan, ethanol would displace 2 billion barrels of imported crude oil between 2006 and 2012, he said.

Nonetheless, the report noted, ethanol supporters still face formidable hurdles.

The oil industry strongly opposes the expanded requirement. The American Petroleum Institute this week released studies arguing that wider use could raise food costs without significantly cutting U.S. dependence on fossil fuels.

The ethanol industry countered with its own lobbying blitz, arguing that 8 billion gallons of ethanol would replace 2 billion barrels of crude oil that won't be needed in the nation's gasoline supply in 2012 and trigger $6 billion in new investment in ethanol production.

Some senators questioned the environmental benefits, noting that in summer ethanol use increases the release of smog-causing volatile organic compounds. They also argued that a mandate nationwide would increase gas prices outside the Midwest, where most ethanol is produced.

Sen. Dianne Feinstein, D-Calif., who strongly opposes requiring ethanol use nationwide, cited a report by the Energy Information Administration that said an 8 billion gallon ethanol use requirement would add 2.4 cents a gallon to the price of gasoline.

Supporters of the mandate dismissed the study, saying it was based on oil costing $25 a barrel, when all expectations are that oil prices -- which were above $50 a barrel in recent months -- will remain substantially higher than that in the foreseeable future.
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