From: Reuters
Published April 29, 2008 05:14 PM

U.S. senator seeks to freeze ethanol requirement

WASHINGTON (Reuters) - Sen. Kay Bailey Hutchison, a Texas Republican, is drawing up legislation that would freeze the U.S. renewable fuels requirement at 2008 levels - 9 billion gallons per year, her spokesman said on Tuesday.

Texas is the biggest U.S. cattle producer by some measures - with 2.8 million head of cattle on its lots. Cattle and poultry producers rely on grain for feed and have been hit hard by soaring corn prices.

Texas Gov. Rick Perry last week petitioned the federal government to cut its renewable fuel requirement in half this year in order to tame soaring grain prices.

Powerful Corn Belt lawmakers such as Sen. Chuck Grassley, an Iowa Republican, have pledged to fight any legislative attempt to reduce or delay the renewable fuels mandate, which has been a boon to their state's farmers.

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President George W. Bush said on Tuesday he is deeply concerned about high food prices but believes ethanol production is responsible for only a small part of food inflation.

He said the rise in food prices has been caused by weather, increased demand and energy prices.

"And the truth of the matter is, it's in our national interest that we -- our farmers -- grow energy, as opposed to us purchasing energy from parts of the world that are unstable or may not like us."

The new energy bill signed into law last year calls for the production of 9 billion gallons of biofuel this year and 10.5 billion gallons next year. The requirement would rise to 36 billion gallons in 2022 - with ethanol supply from corn capped at 15 billion gallons.

With more than 25 percent of corn production expected to be diverted to make biofuel this year, according to the U.S. Department of Agriculture, the grain has soared to record highs above $6.50 a bushel.

(Reporting by Chris Baltimore; Editing by Marguerita Choy)

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