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EPA rejects ethanol waver for Texas

A tank holding ethanol at a fuel tank farm in the Global Petroleum facility in Boston, Mass.

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Kai Ryssdal: In the heated battle over fuel versus food, you can chalk one up for fuel.

Today, the Environmental Protection Agency told Texas Governor Rick Perry that it's not going to let him cut the amount of ethanol Texas has to put in its gasoline. The energy bill Congress passed in December said states have to blend 9 billion gallons of ethanol into their fuel supplies this year.

It takes more than 20 pounds of corn to make a gallon of ethanol, so you can see where I'm going. Texas and other states blame the ethanol requirement for sky high corn and food prices.

Marketplace's Janet Babin has more from North Carolina Public Radio.


Janet Babin: The Environmental Protection Agency said any decision it made on ethanol production now wouldn't bring down prices in Texas.

Jon Doggett with the National Corn Growers Association agrees with the EPA decision.

Jon Doggett: Many things have influenced the price of corn, not least of which is ethanol production. But to lay all of the increase at the foot of the ethanol industry is wrong and that was proved today.

How about those corn prices? They got close to $8 a bushel on the futures market a few months ago and are climbing again on today's announcement.

Those who oppose today's decision, though, say that for every corn farmer reaping a profit, there's a family who can't pay the grocery bill.

Scott Faber with the Grocery Manufacturers Association says more than a third of the corn crop now goes to fuel and that increases the cost of food.

Scott Faber: We're a high volume, low margin industry, so as the cost of these basic ingredients go up, we're going to have to pass some of those costs along to consumers.

Faber says food prices have already risen around 6 percent and critics say ethanol hasn't lived up to its promise. It was supposed to cut pollution and reduce demand for oil.

Frank O'Donnell is with Clean Air Watch. It's not often he agrees with Texas, but he does today. He says the EPA got it wrong.

Frank O'Donnell: We are actually seeing more air pollution this summer than last. Now, maybe it's a coincidence, maybe not, but we've got more ethanol and we've got more smog.

Groups against today's decision plan to lobby Congress to ease the ethanol mandate.

I'm Janet Babin for Marketplace.

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