MCCARTHY INDICATES RFS NUMBERS WILL INCREASE IN FINAL RULE

Lindsay Mitchell

Sep, 03, 2014  |  Today's News

Yesterday during a Barclays CEO Energy-Power Conference luncheon in New York City, EPA Administrator Gina McCarthy alluded that final 2014 Renewable Fuel Standard volume requirements for ethanol will increase from the proposed rule issued November 2013.

“You'll see the numbers will say… if gasoline sales go up, there is a chance for more renewables to get into the system.”  Gasoline sales have been higher than anticipated, a fact that will be reflected in the rule, she said.

You might remember that the 2014 RFS was sent to the White House Office of Management and Budget at the end of August.  They now have 90 days to respond. 

Ethanol Remains Vital to Corn Farmers

Ethanol is a great marketing opportunity for corn farmers and, in fact, presents a hedging opportunity during this period of low corn prices.  According to Don Hofstrand
Retired Agricultural Extension Economist at Iowa State
, “Corn farmers who have a level of investment in ethanol production to match their corn production are surviving the current period of low corn price relatively well due to the ‘ethanol hedge.’

“This can be considered as another risk management strategy called diversification.  Ethanol price is determined by factors in the energy market.  Corn price is determined by factors in the food market (although corn as an ethanol feedstock has made corn price also responsive to the energy market),” he says.