Diminished Corn Production and Ethanol Policy — Should the RFS be Waived? - UNL CropWatch, 9-12

Diminished Corn Production and Ethanol Policy — Should the RFS be Waived? - UNL CropWatch, 9-12

September 14, 2012

In this week's Cornhusker Economics Richard Perrin, Roberts Professor of agricultural economics, looks at potential impacts from changes to the Renewable Fuels Standard (RFS).

The short corn crop and soaring prices due to the drought have brought forth appeals to the Environmental Protection Agency (EPA) to use its discretionary power to waive the Renewable Fuels Standard (RFS) for 2012, 2013, or both. This, it is reasoned, would reduce ethanol production, and therefore reduce corn consumption by the ethanol industry and reduce corn prices. The desirability of these objectives aside, there are some pitfalls in the reasoning, which will be reviewed here.

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