WATCHING WASHINGTON OIL AND ETHANOL SQUARE OFF AGAIN

Oil and ethanol are at it again in Washington.

The White House, for political reasons, is considering actions to boost ethanol use, most likely by giving ethanol a waiver from volatility limits set in the regulation negotiated (reg-neg) on reformulated gasoline.

That would help President Bush's reelection prospects in the grain belt states.

Meanwhile, Sen. Dave Durenberger (R-Minn.) was preparing a Senate resolution to declare the reg-neg approach for certifying reformulated gasolines inconsistent with congressional intent in the 1990 Clean Air Act amendments.

WHAT'S AT ISSUE

Ironically, the ethanol industry was among those that worked with the Environmental Protection Agency last year to draft the gasoline rules in the reg-neg process. Now it wants to change them.

That flip-flop has outraged some of the other participants in the reg-neg talks.

Charles DiBona, American Petroleum Institute president, said, "The Renewable Fuels Association should honor their reg-neg commitment. Instead, at every opportunity, they have sought to overturn the agreement because they claim ethanol has been shut out of the market.

"Nothing could be further from the truth. Ethanol use is growing and will continue to grow. In contrast, the petroleum industry has lost 450,000 jobs in the last decade and will lose more if further special treatment is provided for ethanol fuels."

He said the Energy Information Administration has estimated ethanol use will be 1.1 billion gal in 1992, up 35% from last year and more than 10 times from a decade earlier because it will be used in cities with carbon monoxide problems beginning this year.

DiBona said EIA estimates ethanol use will grow at four times the rate for gasoline and double by 1995.

In a case of "odd bedfellows," API was joined in a press conference by two of its usual adversaries, the Natural Resources Defense Council and the Sierra Club.

Those groups' main concern was that the waiver would increase use of ethanol blends, explaining that a 10% ethanol 90% gasoline mix causes a 17% increase in evaporative hydrocarbon emissions from cars.

They said, "The real issue is that giant agribusiness firms like Archer-Daniels-Midland, already benefiting from a 54 cents/gal tax subsidy on ethanol, do not want to pay the 1 cent/gal of finished fuel that it takes to make this lower volatility gasoline. They want to mix ethanol with ordinary gasoline and ignore the pollution increase.

"Further tax breaks for ethanol are contained in the Senate's version of the pending energy legislation. Even more tax breaks are under consideration by the administration. We will oppose any further tax breaks for ethanol while that industry attempts to raid the Clean Air Act."