The 54-cent-a-gallon tariff the U.S. imposes on ethanol imports from outside the Caribbean basin should remain “for now” to support a domestic industry still in its infancy, Sen. Ken Salazar, D-Colorado, said Tuesday.
“We ought to leave the tariffs in place,” Salazar, a member of the Senate Energy & Natural Resources Committee, said in an interview in Washington. “We need to give our infant industries a greater chance to grow.”
Colorado has about a half-dozen ethanol plants operating or under construction, Salazar said, up from a single plant a year ago.
President Bush last week said he wants to work with Congress to drop the tariff on ethanol, which is made from corn in the U.S., to help address supply concerns and reduce gasoline prices.
Sens. Dianne Feinstein, a California Democrat, and Jon Kyl, an Arizona Republican, introduced legislation this week to drop the tariff, which has been in place since 1980.
Cargill Inc., the fourth-largest U.S. ethanol producer, is importing lower-cost supplies of the gasoline additive from Brazil to capitalize on growing demand from U.S. oil refiners.
Ethanol demand is surging as refiners such as Valero Energy Corp. and ConocoPhillips phase out another additive, methyl tertiary butyl ether, or MTBE, which polluted drinking water in 28 states.
Cargill is able to avoid the tariff by importing ethanol that has been dehydrated at a plant in El Salvador. Central American and Caribbean ethanol plants are allowed to supply 7 percent of U.S. demand tariff-free under a 1983 law aimed at bolstering economic growth in those nations.
Energy Secretary Samuel Bodman said Tuesday the switch from MTBE to ethanol in U.S. gasoline is complete and that the supply disruptions related to the change should be over.
The average U.S. gasoline pump price has jumped about 17 percent since the end of March, partly on concern that the switch in fuel additives would cause shortages.
About 4 billion gallons of ethanol were used in the U.S. last year, and legislation passed by Congress in 2005 mandated that oil companies blend 7.5 billion gallons of the fuel a year into gasoline supplies by 2012.
Decatur, Ill.-based Archer Daniels Midland Co. is the largest U.S. ethanol producer, with a production capacity of 1.1 billion gallons a year, and plans to expand production to 1.6 billion by 2008 as demand increases.
Ethanol plants in Colorado
Three ethanol plants are operational and five are under construction in the state.
Golden
Company: Molson/Coors
Size: About 3 million gallons from waste beer for company use and for sale to wholesalers
Opened: 1996; expanded in 2005
Sterling
Company: Sterling Ethanol
Size: About 45 million gallons per year; designed to produce 90 million gallons
Opened: 2005
Walsh
Company: Sun Energy
Size: About 2 million gallons per year
Opened: 2005
Evans
Company: Great Western Ethanol
Size: 110 million gallons per year
Opening: 2006
Fort Morgan
Company: U.S. Biogen
Size: 100 million gallons per year
Opening: 2007
Windsor
Company: Front Range Energy
Size: About 40 million gallons per year
Opening: 2006
Yuma
Company: Panda Energy
Size: About 100 million gallons per year
Opening: 2007
Yuma
Company: Affiliate of Sterling Ethanol
Size: 46-60 million gallons per year
Opening: 2007
Source: U.S. Sen. Ken Salazar’s office
