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Corn+Soybean Digest

Repeal Of Ethanol Standard Would Be A Costly Mistake

Repealing the Missouri Renewable Fuel Standard (MoRFS) would have costly consequences for Missouri drivers, Missouri Corn Growers Association (MCGA) CEO cautions.

"While recent misleading political proposals claim that repealing the statewide ethanol standard would lower fuel and food prices, the effect would be quite the opposite," says MCGA Chief Executive Officer Gary Marshall. "Simple economics dictate that increasing supply helps reduce price. Utilizing a fuel produced and refined in Missouri is part of the reason our state has some of the lowest gas prices in the nation."

The Missouri Renewable Fuel Standard requires gasoline to be blended with 10% ethanol when ethanol is cheaper than conventional gasoline. This price provision means ethanol cannot increase the cost to consumers, Marshall said.

A wide range of independent economists confirm the savings ethanol is providing to Missouri drivers. A study by Iowa State University's Center for Agriculture & Rural Development concluded Midwest states are saving 39 cents a gallon on gasoline due to the additional supply ethanol adds to the fuel market. Merrill Lynch commodity strategist Francisco Blanch estimated higher savings, with ethanol reducing prices by approximately 15%, or 60 - 70 cents per gallon.

"By adding an American-made product to the strained fuel chain, ethanol is holding prices down by at least 40 cents a gallon," emphasized Marshall. "Those who blame ethanol for skyrocketing food and fuel costs are not basing their arguments on all the facts."

Despite what some political ads claim, recent reports point to escalating energy costs as the predominant driver in increased food prices. According to figures from the U.S. Bureau of Labor Statistics, while households are facing a 23% increase in their total food costs, they are facing a 335% increase in their gasoline costs since 2002.

"If fuel prices had increased at the same rate as food, we would only be paying $1.39/gal. for gasoline," Marshall says. "And while grocery bills are going up due mainly to increasing transportation, labor and marketing expenses, Missouri's food costs remain inline with other neighboring states. The hype is just that - hype."

To learn more about corn and ethanol production in Missouri, or to find additional facts on food and fuel, visit Missouri Corn Online.
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