Schumer urges lifting imported ethanol tariff

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NEW YORK (AP) – Sen. Charles Schumer urged Congress on Sunday to temporarily suspend the tariff on imported ethanol, a move he said could cut gasoline prices by up to eight cents a gallon, and called for a tax incentive to spur production of ethanol.

The two actions, while limited in effect, would help to ease the price of gasoline through the summer months when national gasoline consumption reaches its peak, Schumer, a New York Democrat, said at a news conference.

“It’s not going to solve the whole problem – there are lots of other things I’ve been advocating – but it will certainly make a difference in a quick, easy and simple way,” he said. “It makes no sense, when we are desperately short of ethanol, to have this tariff, which was done at the behest of agribusiness and midwestern corn farmers.”

The Energy Bill recently adopted by Congress requires all gasoline sold in the United States to have 10 percent ethanol. The tariff on imported ethanol is 54 cents a gallon.

Schumer’s proposal, which he said he would offer as legislation this week, would encourage the import of more ethanol from Brazil, Mexico and other foreign producers, leading to a lowering of fuel costs at the pump.

Schumer noted that President Bush on Friday called for a temporary suspension of the ethanol tariff, and similar legislation has been proposed in the House, offering the prospect of bipartisan support for the cutback.

However, any proposal to cut the tariff would likely encounter stiff opposition from farm-state lawmakers.

Sen. Charles Grassley, R-Iowa, chairman of the Finance Committee, which would consider the proposal, said it would “send a signal that we’re backing away from our own efforts to seek energy independence.”

Ethanol is produced domestically in 21 states, mostly from corn in midwestern states such as Iowa, Illinois, Nebraska and South Dakota. But among states that consume the most gasoline, only the top two, California and Texas, produce any ethanol from corn or other sources such as sugar or cellulose.

Schumer said he also would propose a tax incentive for new ethanol production facilities in states that now produce less than 2 percent of national ethanol production but consume more than 2 percent of gasoline purchased.

Oil companies have said a federally mandated switch from MTBE to ethanol as a gas additive helped to drive up fuel costs. MTBE, or methyl tertiary butyl ether, was found to be a carcinogen if leaked into water supplies.

Energy experts say changes in the supply system caused by the switch affected price more than a shortage of ethanol.

“Normally, a change like that is done over several years,” says energy consultant Daniel Yergin of Cambridge Energy Research.

Congress last summer ordered in increase of ethanol as a fuel additive to 4 billion gallons this year and 7.5 billion gallons by 2012.

AP-ES-05-07-06 1603EDT

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