Credit Suisse says no need for Renewable Fuel Standard, ethanol works at $8 a bushel of corn when oil above $120

An analyst with Credit Suisse said that the energy from corn is worth $8 per bushel while oil remains above $120 per barrel. Accordingly, with corn prices now dropping (currently at $5.80 per bushel, down from more than $6), the advantage in blending ethanol will exist regardless of the presence of the Renewable Fuel Standard in the US. The Standard requires blending of 9 billion gallons of ethanol with gasoline this year.

The RFS has come under increasing fire over food prices, and Texas Senator Kay Bailey Hutchinson has introduced legislation to freeze the biofuel mandate passed in the Energy Independence and Security Act last December.

Senator James Inhofe of Oklahoma called on the EPA to impose “an immediate waiver from [biofuels] mandates” while a review of the impact of ethanol production on the global food crisis is undertaken. “People are starving to death because of this transfer from food to fuel,” Inhofe said. “As the ranking member of the EPW committee, which has jurisdiction, I’m going to ask for an immediate waiver to stop this mandate.”

Senator Hutchinson had put a procedural hold on the 2007 Senate Energy Bill in October, arguing that the bill was bad for Texas. The bill eventually was passed without the Renewable Power Standard. Food groups, oil and gas companies and some livestock producers had requested a lower corn ethanol mandate, and have asked that higher mandates increases be tied to technological improvements.

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