BATON ROUGE, La. -- Governor Kathleen Blanco signed into law a bill (HB 685), designed to assist Louisiana farmers and consumers, that requires refineries to mix ethanol with some of the gasoline they produce.
In examining this bill, I looked at four key points, Blanco said. First, ethanol facilities will provide Louisiana farmers a new market for their crops, diversifying our economy and creating hundreds of permanent jobs. Second, consumers are expected to have affordable, quality choices at the pump or the implementation of the ethanol legislation [image-nocss] will be delayed by the Department of Agriculture. Third, ethanol blends reduce the toxicity of fuels and are better for the environment. And finally, it will take at least 18 to 24 months before producers can make enough product to trigger the mandate in the legislation.
She added, My No. 1 guiding principle in this whole process is to ensure that the consumer is protected. [Agriculture Commissioner Bob] Odom has assured me that the implementation of the legislation will be delayed if there are indications that the mandate would raise gas prices for consumers. Click here to view Odom's letter to the governor regarding this legislation.
Blanco signed the bill, sponsored by State Representative Francis Thompson (D), over business and oil and gas industry objections, added a report by The Shreveport Times. Jeff Copeskey, representing the MidContinent Oil & Gas Association, said oil producers and refiners are disappointed in the governor's decision after they presented arguments against signing the bill.
Besides raising prices at the pump because ethanol is more expensive, industry officials said costs would increase because equipment at refineries and fuel tanks at gas stations would have to be changed and ethanol could not be transported in pipelines so it would have to be trucked. The only way to assure Louisiana motorists' costs won't be higher is if the price of ethanol is not higher than gasoline, Copeskey told the newspaper. That's certainly not the case.
The underlying problem, he said, is we have agriculture dictating energy policy. We don't tell farmers how to grow corn.
Since Odom has pledged the mixture won't have to be produced if it would increase the price of gasoline, refineries are reluctant to invest millions of dollars in revising their equipment until the price of ethanol goes down, Copeskey said.
Thompson said the state entering the ethanol market ahead of other Southern states is futuristic. It positions us well for both petroleum and ethanol refineries. We're going to see a lot of activity. It's common sense to be producing alternative fuels with renewable resources. It will give us a better economic edge for the future but it's not going to replace petroleum. I predict there will be more and more petroleum companies that own ethanol plants.
Thompson said that unlike the state's efforts to attract other types of industry, we didn't have to put up any money to bring anybody in. At least four ethanol plants are planned for the state but it will take about two years to get into production.
He said that although the new law, which doesn't go into effect until ethanol plants are almost in full production, requires blending, it does not require Louisiana merchants to sell it. He said he believes a 5% ethanol blended gasoline will be cheaper, so motorists will demand it.
Copeskey said Houston already is required to sell a 5.7% ethanol blend and the price of gasoline is much higher than other cities.
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