Calls to scrap ethanol mandate intensify with drought

By Steve Hargreaves @CNNMoney August 7, 2012: 3:07 PM ET

High corn prices sparked by the drought are leading to renewed calls for an end to the ethanol mandate.

NEW YORK (CNNMoney) -- The drought that's killing crops across the Midwest and sending corn prices to record highs has revived calls to end or ease the government's requirement that corn-based ethanol be blended with gasoline.

Current rules stipulate that nearly 10% of the nation's gasoline supply come from corn-based ethanol. To make that ethanol, up to 40% of the country's annual corn production can be required.

With corn prices surging -- they're up 50% in the last six weeks alone -- many say waiving the mandate would help bring those prices down. They say lower corn prices would also help lower prices for certain foods that depend on the crop, like cereal and meat.

"The impact this is having on the animal protein industry and at the dinner table is profound," Arkansas Republican Congressman Steve Womack said in a statement last week. "If something isn't done -- and done fast -- food prices will soar."

Womack and 150 other lawmakers from both parties sent a letter to Environmental Protection Agency head Lisa Jackson last week asking her to ease the ethanol mandate.

Critics of the mandate have been arguing for some time that the law, which constitutes the primary government support the industry receives since its tax credit expired last year, should either be reduced or eliminated altogether.

It's an eclectic list of detractors.

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