WASHINGTON - Bridging longtime differences between farm and oil interests, senators agreed Friday to triple the ethanol used in gasoline and to ban a fuel additive that has fouled drinking water.
The compromise ensures that a package of new gasoline requirements - aimed at giving refiners more flexibility, helping farmers sell corn for ethanol and ensuring no backsliding in air quality - will be part of energy legislation now before the Senate.
But some California officials worried the ethanol requirement could cause fuel shortages and high prices because the state's refineries already operate at high capacity and there is little ethanol produced in the state. Ethanol takes up less volume than the fuel additive MTBE, meaning more gasoline will have to be refined, possibly causing shortages, they said.
"There's a big question about whether California can absorb this mandate without gasoline prices rising significantly," said Sen. Dianne Feinstein, D-Calif.
Ethanol industry spokesmen said California refiners under the legislation could either use ethanol or purchase credits from refiners in other parts of the country. The industry also has long insisted that enough ethanol can be made available in the state.
The gasoline agreement would require refiners by 2012 to use at least 5 billion gallons of corn-based ethanol or other bio-fuel nationwide, about three times the amount produced today and a boon to farmers.
The first stage of the new ethanol mandate would go into effect in two years when the volume must increase from the current 1.7 billion gallons to 2.3 billion gallons nationwide.
Senate Majority Leader Tom Daschle, D-S.D., a strong supporter of ethanol, called the compromise "a fine balance" that will make federal gasoline rules more flexible while still protecting air quality.
ENERGY BILL HIGHLIGHTS
The energy bill approved by the Senate on Friday also: